Loopback on LTC2863 RS-422 transceiver not working
I think I can "piece together" your problem now.


  I am using the above system


In your update, you seem to refer to the LTC2863 pinout. Therefore much of the confusion was that you originally mentioned in a (broken) link, that you were using the LTC2862 not the LTC2863. :-(

Assuming you really did mean LTC2863, then:


  I am using the LTC2863 which has only 1 diff tranciever.


Not exactly. The LTC2863 has 1 differential transmitter (driver) output and 1 differential receiver input. It has no combined transceiver connection. (The LTC2862 has a single transceiver connection pair.) The fact that the LTC2863 has separate transmitter and receiver connections does allow it to have a loopback attached to it.


  I am connecting A* to Y* and B* to Z*. Should this loop back work ?


Yes, that should work correctly. (FYI, you don't need the "*" characters - that is just shown on some of their diagrams, because those pins have 15 kV HBM ESD protection.) 

Here is the explanation about what those pins are:



You would be connecting pin Y to pin A (non-inverting driver to non-inverting receiver) and pin Z to pin B (inverting driver to inverting receiver). Thereby correctly connecting the inverting signals together and the non-inverting signals together.

Although it is a slightly unusual example circuit, this diagram from the datasheet confirms that those are the correct connections (driver pin Y connected to receiver pin A and driver pin Z connected to receiver pin B):