Document background
The Red Letter of Credit evolved as a response to complex international trade requirements in high-risk scenarios. Under Singapore's robust financial framework, this instrument provides additional security layers beyond standard Letters of Credit. It is typically employed when dealing with new trading partners, politically volatile regions, or high-value transactions. The Red Letter of Credit includes stringent documentation requirements, specific conditions for payment release, and often requires additional bank verification steps. Its use is particularly prevalent in Singapore's role as a major international trading hub.
