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Definition

Back to Back Credits

Back to Back Credits or Head and Counter Credits is a documentary credit (counter) taken out by an importer to allow purchase of goods required to meet a sale covered under an original (head) credit.

Under this type of arrangement, the first credit can be offered in support of security to the importers bank. As applicant for the second credit (counter), the importer is responsible for reimbursing the bank for payment made under it, regardless of whether or not he is paid as a seller under the original credit.

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