Checks worth 221 trillion rials ($850 million) bounced in the month to November 20 -- 3.1% higher on a monthly basis.
According to data published by Central Bank of Iran, the number of bad checks stood at 681,000 down 7.2%. Bounced checks accounted for 8.5% and 11.6% of the total volume and value of written checks, respectively.
Bad checks in Tehran Province accounted for 7.3% and 11% of all drawn checks in the capital in volume and value terms.
During the month under review, the number of checks returned in the capital reached close to 171,000 worth 100 trillion rials ($384.61m).
Kohgilouyeh-Boyerahmad Province was first with the highest ratio of bounced checks to transacted checks at 17.5%. Provinces with the lowest ratio were Gilan 5.7%, Mazandaran 7.2% and Alborz 7.3%.
Insufficient funds in the accounts of issuers were the main reason he checks were rejected.
Drawn Checks
During the month the number of issued checks fell 9.4% to reach 8 million. In value terms, total written checks declined 12.4% to stand at 1,901 trillion rials ($7.31b).
The decline could be partially linked to closure of businesses due to the lockdowns to curb the coronavirus pandemic.
The CBI relaxed rules in the month exempting checkbook holders with bounced checks from some rules governing bad checks and help protect businesses hammered by Covid-19.
In a directive to banks, the regulator allowed those who had issued checks with non-sufficient funds and whose checks matured from Nov. 21 till Jan. 19 to be exempt from penalties suspending access to banking services, such as getting new checkbooks.
More than 2.3 million checks valued at 911 trillion rials ($3.5 b) changed hands in Tehran Province in the month. Banks processed more than 532,000 cashier checks worth 1,146 trillion rials ($4.4b), indicating 16.4% and 16.5% decline in volume and value, respectively. More than 158,000 checks worth 671 trillion rials were cashed.
A cashier's check is a check guaranteed by a bank, drawn on the bank's own funds and signed by a cashier. Cashier's checks are treated as guaranteed funds because the bank, rather than the purchaser, is responsible for paying the amount.
E-Checks Planned
The CBI plans to unveil electronic checks to substitute the conventional paper checks as part of the amendment to the Check Issuance Law. The new framework is expected to increase transparency in the check system and curb rubber and forged checks.
Rules stipulate tougher measures against defaulters. If a check bounces due to insufficient funds, courts are authorized to seize the amount from other assets of the signatory of the check. The law penalizes those who acquire a checkbook through fraudulent means and bank staff who assist them.
Law also bans checkbook holders from issuing "bearer checks". As the name suggests, bearer checks are payable to the person who brings the check to bank.
The CBI has designed an integrated electronic check system and streamlined electronic check-processing platforms for issuing digital checks.
Sayyad is one such platform. It is a system designed to run a credibility check on account holders wanting to write a check.
