The new law governing check transactions will be implemented in phases to facilitate a smooth transition, the Central Bank of Iran said.
Groundwork for executing the check law is ready, the CBI public relations website said, adding that the gradual process would “minimize the challenges and possible negative impact on businesses.”
It was announced earlier that the new check law would be enforced on Dec.12. But the CBI apparently prefers a phased out procedure on the premise that the public is not yet prepared to adjust with the new rules.
"Due to critical changes in check transactions, including issuance, clearance and endorsement as per the new law and given the negative economic impact of the coronavirus pandemic, the law will be enforced in phases," the CBI said. Doing so will give the regulator more time to help increase public awareness about the new rules.
Davoud Mohamad-Baigi, the CBI deputy for payment systems, said "getting people accustomed to changes in the check issuing system is the main challenge for enforcing new rules". he said adjusting to the change and informing the people about it are cause of concern for the regulator.
"An estimated 110 million interbank checks are exchanged by and among businesses each year. The number for intra-bank checks is double. Check is a widely used instrument and a sudden change could disrupt the trade cycle," he said.
E-Checks
As per the new law passed by parliament in Nov. 2018, the CBI was given two years to prepare infrastructure. Lunching electronic checks is an essential component of the new law. Electronic checks are supposed to substitute the conventional paper checks as part of the amendment to the Check Issuance Law.
The new framework is expected to increase transparency and curb rubber and forged checks. 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 help improve credibility of checks.
The law penalizes those who acquire a checkbook through fraudulent means and bank staff who violate the law.
Depriving unlawful checkbook-holders the right to loans and other bank financial facilities are also enshrined in the amended law. Access to checkbooks will be difficult and the eligibility and credibility of applicants will be verified.
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 also bans checkbook holders from issuing "bearer checks". As the name suggests, bearer checks are payable to the person who brings the check to the bank.
Given the role and significance of checks, rules governing check issuance have been revised seven times, the last in Nov. 2018.
