More than 496,000 checks bounced in the eighth fiscal month ending Nov. 22, up 2.4% on the previous month.
The bad checks were worth an estimated 343 trillion rials ($844 million) – down 2.8% in value monthly, the Central Bank of Iran reported.
It said the rejected checks accounted for 7.1% of the total (value) drawn checks and 9.3% of the volume of checks issued in the month.
In the corresponding period last year, 8.9% and 12.2% of the volume and value of all drawn checks, respectively, were rejected, accounting for 7.6% and 11.1% of the total drawn checks in terms of volume and value, respectively.
A total of 146,000 checks worth 145 trillion rials ($357 million) were rejected in Tehran Province accounting for 6.6% and 7.9% of the volume and value of all drawn checks, respectively.
Kohgiluyeh-Boyerahmad Province topped the list of provinces with the highest ratio of bad checks to transacted checks at 10.9%, followed by Kurdestan 9.7% and Chaharmahal-Bakhtiari 9.2%.
Provinces at the lower end were Gilan at 5.2%, Khuzestan (6.3%) and Alborz, Kermanshah and Golestan provinces with 6.5%. Kerman topped the list of provinces with the highest ratio of bad checks to transacted checks at 16%. Insufficient funds in the accounts of issuers were the main reason behind the rejection of checks.
Drawn Checks
More than 7 million checks worth 3,679 trillion rials ($9.06 billion) were drawn in the month. The number of transacted checks increased 9.2% with the value up 15.5% on the earlier month.
Of the total checks drawn, 2.2 million worth 1,847 trillion rials ($4.5 billion) were issued in Tehran Province, accounting for 31.5% and 50.2% of all drawn checks in volume and value, respectively. Isfahan Province was next with 10.6% of all drawn checks and 7.1% of the value of checks.
Customers cashed an estimated 6.5 million checks worth 3,335 ($8.2 billion) during the month, up 9.8% in volume and 17.8% in value on the earlier month.
Around 419,000 cashier checks worth 1,662 trillion rials were cleared by banks — 8.6% higher in volume and up 30.9% in value. Of these, 133,000 checks worth 965 trillion rials were cashed in the capital 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 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 will soon announce new measures to maintain and improve the credibility of checks as a reliable financial instrument.
It 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 improving credibility.
The CBI also unveiled a new platform “MahCheck” that allows the withdrawal of money from defaulter accounts in other banks.
A new electronic check system was unveiled in Tehran recently. As per the new check law the system (aka Checkad) will handle e-checks.
An e-check is a new form of check subjected to the same regulations covering printed checks and are validated by digital signature.
An electronic check, or e-check, is a form of payment via internet or another data network crafted to perform like any conventional paper check. Because the check is in an electronic format, it is processed faster and curbs bureaucratic hassles.
