More than 499,000 checks bounced in the ninth fiscal month ending Dec. 22, up 0.6% on the previous month. The checks were worth 338 trillion rials ($804.7 million), posting 1.6% decline on a monthly basis, the Central Bank of Iran reported.
Bad checks accounted for 6.9% of total drawn checks and 8.5% of the volume of all checks issued in the month.
In the corresponding period last year, 8.3% and 9.9% of the volume and value of all drawn checks were rejected. Bad checks accounted for 7.1% and 9.3% of the total drawn checks in the eighth month of the calendar year in terms of volume and value, respectively.
Almost 148,000 checks worth 142 trillion rials ($338 million) were rejected in Tehran Province accounting for 6.4% and 7.2% 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 10.91%, followed by Ilam (10.3%) and North Khorasan with 10.1%
Provinces at the lowest end were Gilan at 5.2%, Khuzestan (6.13%) and Alborz and Golestan provinces with 6.4%. Ilam topped the list of provinces with the highest ratio of the value of bad checks to transacted checks at 17.1%. Insufficient funds in the accounts of issuers were the main reason behind the rejection of checks.
7.2m Checks Issued
More than 7.2 million checks worth 3,978 trillion rials ($9.471 billion) were drawn in the month -- up 3.3% in value and 8.1% in volume on the earlier month.
Of the total 2.3 million worth 1,975 trillion rials ($4.7 billion) were issued in Tehran Province accounting for 31.8% and 49.6% of all drawn checks in volume and value, respectively. Isfahan Province was second with 10.5% in volume and 7.2% of the value of checks.
Bank customers cashed an estimated 6.7 million checks worth 3,641 ($8.66 billion) during the month, up 3.5% in volume and 9.2% in value on the earlier month.
Around 426,000 cashier checks worth 1,784 trillion rials were cleared by banks — 1.7% higher in volume and 7.3% up in value. Of these, 133,000 checks worth 985 trillion rials were cashed in Tehran.
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 improving credibility.
The CBI recently unveiled a new platform “MahCheck” that allows the withdrawal of money from defaulters' accounts in other banks.
A new electronic check system was unveiled recently. As per the new check law, the digital secure check system (aka Checkad) operates with electronic checks.
An e-check is a new form of check subjected to the same regulations covering printed checks. E-checks are validated by a 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 electronic format, it is processed faster and reduces bureaucratic hassles.
The CBI announced earlier that electronic checks can be processed electronically in line with plans to promote offering remote services by banks.
