Economy, Business And Markets

‘Chekavak’ Exposes Flawed Check System

‘Chekavak’ Exposes Flawed Check System ‘Chekavak’ Exposes Flawed Check System

The number of bounced checks has increased after the newly introduced electronic check system, Chekavak, came into effect.  The Secretary General of the Central Bank of Iran Seyyed Mahmoud Ahmadi outlined the repercussions of implementing the e-check system, ISNA reported Saturday.

 “It was natural that after the first phase of Chekavak was launched, the number of bounced checks shot up,” he said, without explaining why this had been the case and what was the connection between the two.

Chekavak is an electronic check processing system introduced by the CBI, which primarily aims at eliminating the physical circulation of checks in the banking system and at the same time seeks to improve the credibility of the checks. By introducing Chekavak, the CBI has sought to put in order check transactions. It came into effect last December.

Without disclosing the number of bad checks, Ahmadi said during the past four years the banking system had been inundated with “22.7 millions bad checks.”

Chekavak is to be developed and improved in two separate phases, according to the official. “The first includes developing new services for eliminating the manual (and time-consuming) process of check payment.”

Ahmadi said the first phase has been completed as checks are processed automatically with the minimum time.  Previously, it took at least 48 hours for checks to be cleared. But with Chekavak, a picture of the check is sent to the drawer bank for authentication and thus the clearance time is cut by almost half.

Implementing the second phase of Chekavak will require more time, said Ahmadi, adding that the second step includes transforming the traditional checks into a unified form with added security features.

With Chekavak operational, verification of checks and the clients’ financial status is computerized and can be accessed by the bank with the press of a button.