More than 552,000 checks bounced in the sixth calendar month to September 22, down 14% on the month before as banks cleared more checks compared to the recent past.
The checks were worth 353 trillion rials ($1.07 billion), down 10.6% on a monthly basis, the Central Bank of Iran reported.
Bad checks accounted for 8.2% of total drawn checks, and 10.5% of the volume of all checks issued in the month.
In the corresponding period last year 9.7% and 12.6% of the volume and value of all drawn checks were rejected. Bad checks accounted for 9.1% and 11.4% of the total drawn checks in the fifth month of the Iranian year.
A total of 162,000 checks worth 151 trillion rials ($460 million) were rejected in Tehran Province accounting for 7.6% and 8.9% of the volume and value of all drawn checks, respectively.
Kurdestan topped the list of provinces with the highest ratio of bad checks to transacted checks at 11.3%, followed by Chaharmahal-Bakhtiari 11% and Lorestan with 10.9%.
Provinces with the lowest ratio were Gilan at 5.7%, Golestan 7.1% and Kermanshah 7.2%.
Bushehr topped the list of provinces with the highest ratio of the value of bad checks to transacted checks at 28%.
Insufficient funds in the accounts of issuers were the main reason why the checks were rejected.
Drawn Checks
More than 6.7 million checks worth 3,351 trillion rials ($10.2 billion) were drawn in the month. The number of transacted checks decreased 4.9% with the value down 3.4% on the earlier month.
Of the total checks drawn, 2.1 million worth 1,703 trillion rials ($5.1 billion) were issued in Tehran Province.
Tehran Province accounted for 31.7% and 50.8% of all drawn checks in volume and value, respectively. Isfahan Province was second with 10.7% of all drawn checks and 7.1% of the value of checks.
Bank customers cashed an estimated 6.4 million checks worth 3,074 ($9.75 billion) during the month, up 12.3% in volume and 3.3% in value on the earlier month.
Around 400,000 cashier checks worth 1,502 trillion rials were cleared by banks—6.4% less in volume and 24.3% lower in value. Of these 130,000 checks worth 880 trillion rials were cashed in Tehran.
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.
The CBI report covered interbank checks processed by Chekavak, a CBI-affiliated electronic check processing system, which does not include those circulated within branches of any single bank.
Measures against bad checks became law in 2018 as part of amendments to the Check Issuance Law.
The central bank says it is planning effective measures to maintain and improve the credibility of checks as a reliable financial instrument.
It has introduced digital checks after designing an integrated electronic check system and streamlined current electronic check-processing platforms, namely Sayyad and Chekavak.
Sayyad is 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 improve the credibility.
The CBI recently unveiled a new platform ‘MahCheck’ that allows withdrawal of money from defaulters' accounts in other banks.
