I (Meaning and importance of Exports) Unit Structure

7. Revolving Letter of Credit 
 
 
The importer opens a L/C with substantial amount for a 
specific period in favour of the exporter. The exporter can make 
one or more shipments and withdraw payment against the original 
L/C. when the amount and restores the balance. This L/C is 
suitable when there is regular flow of trade activities between the 
importer and exporter. 
8. Transferable L/C 
 
 
 
A transferable L/C is one which contains an express 
provision that the benefits under it may be transferred either fully or 
partly to one or more parties. In our country, such L/C can be 
transferred only once and that too within the country. 
9. Red Clause L/C 
 
 
It is a special clause incorporated in red ink in the 
documentary credit, which authories the negotiating bank ot grant 
advances, on the receipt of full set of shipping documents. The 

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exporter receives payments from his bank on the submission of 
shipping documents. 
10. Back-to 
–Back L/C 
 
 
It is a domestic L/C. it is an ancillary credit created by a bank 
based on a confirmed export L/C received by the direct exporters. 
The direct exporter keeps the original L/C with the negotiating or 
some other bank in India, as a security, and obtains another L/C in 
favour of domestic supplier. Through this route the domestic 
supplier gains direct access to a pre-shipment loan based on the 
receipt of domestic or back-to-back L/C. 
11. Traveller‘s L/C 
 
 
This type of L/C is issued to a person who plans to visit 
foreign countries. Up to the amount mentioned in L/C, the person 
can draw cheques which the banks will honour. It is of great 
convenience for the person because he can draw several cheques 
up to the amount mentioned in L/C.