Given the widespread use of checks in Iranian trade and transactions, the Central Bank of Iran will likely face a tough time in getting people accustomed to changes in the check issuing system, the CBI's deputy for payment systems said.
The CBI plans to unveil electronic checks to substitute the conventional paper checks from this weekend as part of the amendment to the Check Issuance Law.
"The CBI has two tasks with regard to digitizing checks: first launching the e-check system and second the transition from physical checks," Davoud Mohamad-Baigi was quoted as saying by the CBI public relations office.
He said adjusting to the change and informing the people about enforcing the new law are cause of concern for the regulator.
"Almost 110 million interbank checks are exchanged by and among businesses each year. The number for intra-bank checks is twice this. The check is a widely used instrument and a sudden change could disrupt the trade cycle," he said.
As per the new law passed by the parliament in Nov. 2018, the CBI was given two years to prepare the infrastructure and implement the law.
A key aspect of the legislation is launching electronic checks and getting rid of physical checks. The groundwork and technical infrastructure for this is in place, the CBI vice governor Akbar Komijani said this week.
Pointing to the complex technical infrastructure for electronic checks, Komijani said the CBI has designed an integrated electronic check system and streamlined 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.
Given the role and significance of checks, rules governing check issuance have been revised seven times, the last in Nov. 2018.
As per provisions of the ‘Amendment to Check Issuance Law’ those who issue bad checks face heavy penalties and a bank is allowed to close all their accounts in other banks across the country.
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 indeed worthless due to insufficient funds, courts are authorized to seize the amount from other assets of the signatory.
