Economy, Business And Markets

Data on Bad Checks Long Overdue

Data on Bad Checks Long Overdue Data on Bad Checks Long Overdue

After a year of silence, unofficial reports suggest that the Central Bank of Iran is set to publish the long-awaited data on bad checks.

The regulator had refrained from publishing figures on the multi-billion-dollar kites and indices seemingly not fit for public release and discourse. Figures have not been published or were missing, triggering speculation among local economists on the real status of key indices, Eghtesad News website reported.

Economic growth, non-performing loans and bad checks are among the economic indices whose exact status has been subject to estimates because of the absence of reliable official data.

The last time CBI published figures on bad checks was in December 2014 when it said over 420 trillion rials ($14 billion) worth of checks were reported to have bounced during the first eight months of the fiscal year (started March 21, 2014). More than 31 million checks worth 8.07 quadrillion rials ($291.8 billion) circulated thorough the banking system during that period, showing a 6.3 % rise in number and 15.8 % increase in the total value.

Soon after the launch of e-check system known as ‘Chekavak’ in late December 2014, the CBI stopped publishing data on bad checks. At the time, Mahmoud Ahmadi, a senior official at the bank had warned that the number of bad checks would rise due to the new system because the number and with it data on bad checks would increase.

With Checkavak going online, the verification of checks and the clients’ financial status were computerized and accessible instantly by banks. Previously, it took at least 48 hours for checks to be cleared. But with Checkavak, a photo of the check is sent to the original bank for verification, thus, reducing clearance period to less than 24 hours.

Delays in publishing figures on bounced checks have been attributed to shortcomings in the earlier reports that were published by the CBI Economic Statistics Division, an informed source says. “The new report is awaiting approval by the CBI vice governor.”

The unidentified source confirmed that the CBI has ordered all commercial lenders to upload details of  bad checks on portals dedicated for this purpose.

Economists attribute the secretive approach of the CBI in publishing critical data to the deepening recession that has indeed given rise to the large number of kites.

“Bad checks are among the instruments that project the health of the economy”, Heidar Mostakhdemin Hosseini, a former CBI deputy chief says. “The number of bad checks in 2014 increased markedly compared to 2013 according to CBI data that indicates the recession has worsened.”

As also admitted by some commercial bank managers, since 2009, bad checks have been on the rise both in number and value, the senior analyst noted.

He criticized the CBI’s opaque approach to statistics and said “Withholding data on key economic indicators paves the way for more rumors and speculations.”

Hosseini called on the government to develop a workable plan for ending the recession and stimulating decent levels of growth. “The two recent plans to ease the recession unveiled by the government suffer from fundamental flaws and have proved to be ineffective because they were designed in a hurry.”

The government has so far come up with two packages, namely to stimulate consumer demand, the car loan scheme and the credit cards for buying domestically-manufactured home appliances.