Red Clause
Red Clause : An Authorization in a commercial letter of credit authorizing the advising/negotiating bank to make a limited advance to the seller before the shipment to the buyer is made. Such advances can be made up to 100% of the shipment value. These advances enable the seller to procure supplies for manufacturing or shipment. Negotiations of Red Clause credits are restricted to the bank making the advances in order to assure that proceeds from the shipment are used to repay the advances
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