The Central Bank of Iran is ready to implement amendments to the Check Issuance Law passed by the Majlis in Nov. 2018. The new law will be enforced from the next Iranian calendar month starting Nov. 21, according to a CBI press release.
In that year parliament gave the CBI, as the body in charge of enforcing check laws, two years to prepare the infrastructure and implement the law.
So far the CBI has implemented those aspects of the law that were feasible without needing for new, costly and time-consuming infrastructure, the CBI vice governor Akbar Komijani said.
A key aspect of the new law is launching electronic checks and removing physical checks from business transactions. The groundwork and technical infrastructure for this is in place, he said on Sunday.
As per provisions of the law dubbed "Amendment to Check Issuance Law", those who issue bad checks face heavier penalties and a bank is allowed to close all their accounts in other banks across the country. Defaulters are also banned from opening new bank accounts.
Depriving checkbook-holders the right to bank loans and other financial facilities are enshrined in the amended law. Access to checkbooks will be difficult and the credibility of applicants will be verified beforehand.
If a bad check is definitive due to insufficient funds, courts are authorized to seize the amount from other assets of the signatory of the check. The amended law has also set penalties for those who acquire a checkbook through fraudulent means and for bank staff who violate the law.
Komijani said the above measures were implemented soon after the law was passed in the chamber.
Electronic Checks
Despite other clauses in the amendment, the CBI has not been able to fully deliver electronic checks. However, the grounds are ready to launch the long-awaited digital checks.
Pointing to the complex technical infrastructure for electronic checks, Komijani said the CBI has designed an integrated electronic check system and streamlined current electronic check-processing platforms, namely Sayyad and Chekavak, for issuing digital checks.
Sayyad is a system designed to run a credibility check on account holders wanting to write a check. Chekavak is an electronic check processing system for eliminating the physical circulation of checks and at the same time improve the credibility of checks.
Checks are the most commonly used financial instruments in Iran. However, rules were revised due to numerous flaws in the past that resulted in a mountain of bounced checks and undermined trust in check system.
Given the role and significance of checks, rules governing check issuance have been revised seven times, the last of which was in November 2018.
"The new amendment was such that economists, bank officials and market experts billed it as a ‘big leap forward’ in reforming the banking system," Komijani was quoted as saying.
He added that "the volume of bounced checks has declined significantly with the partial implementation of the new check law.”
