The Central Bank of Iran has implemented new rules to help reduce the number of bounced checks.
Based on the new rules, if a check is rejected due to insufficient funds, the amount will be deducted from defaulters' accounts in other banks in the country, said Mehran Moharramian, the CBI deputy for innovative technologies.
"In the past banks could take money from defaulters' accounts only in the same bank…However, as of Saturday, the amount(s) will be taken from accounts owned by the check writer in other banks," the CBI website quoted him as saying.
The new rules seek to discourage bad checks, but it only blocks the amount written in the check in other bank accounts of the check writers, the official noted. "When the money is blocked, a court order is needed for withdrawal and clearing the check."
Banks have been instructed to start blocking the amount from defaulters' accounts with the highest balance. "If the deposits are not sufficient to clear the check, lenders should approach the next largest accounts of the debtors."
Moharramian added that a bank will only block the bounced check amounts in the check writer’s accounts.
"We have been working on this issue with lawmakers," he said, "The ultimate goal is to reduce the number of bad checks because it has severe consequences for bank customers."
Measures against bad checks were made law in 2018, as a part of the amendments to the Check Issuance Law.
In that year parliament gave the CBI, as the body in charge of enforcing check laws, two years to prepare the infrastructure to implement the law.
According to the latest figures, checks rejected in the calendar month to April 20 declined 37.6% from the earlier month to reach 207 trillion rials ($690 million).
In terms of numbers they were stood at 471,000, down 24.2% in one month. In both volume and value, bad checks accounted for 9.1% and 11.2% of all drawn checks in the month, respectively.
Compared to the corresponding month in the last fiscal year, when the new check law came into force, the rejected checks dropped 24.2% in number.
A key aspect of the new law is launching electronic checks and gradually eliminating physical checks. The CBI has managed to implement digital checks, after designing an integrated electronic check system and streamlined current electronic check-processing platforms, namely Sayyad and Chekavak.
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.
As per provisions of the law dubbed "Amendment to Check Issuance Law", 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 fraud and for bank staff who violate the law.
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.
