Economy, Business And Markets

Bad Checks Tag: $18.1b

Bad Checks Tag: $18.1bBad Checks Tag: $18.1b

The number of bounced checks has been increasing in recent months and at the end of the first nine months (December, 21, 2014) more than 4.5 million checks reportedly bounced, showing a 20.4 percent increase compared to the same period last year.

Bounced checks are one of the main factors engendering distrust in the market and economy. The governor of the Central Bank of Iran (CBI), Valiollah Seif, had earlier admitted that the increasing number of bounced checks is disturbingly high.

According to CBI data, 498 trillion rials ($18.1 billion at official exchange rate) worth of checks bounced during the period, showing a 35.1 percent increase in value.

Totally 35.9 million checks worth nearly 9.15 quadrillion rials ($333 billion) were processed, indicating a 16.4 percent growth.

Given the dire situation of checks in the banking system, the CBI has recently introduced an electronic system, named Checkavak, specifically for the purpose of transferring checks.

The system was introduced with hopes to eliminate physical circulation of checks in the banking network and to increase check credibility so that eventually the amount of bounced checks would decrease.

The unified electronic check exchange system is now up and running in 13 provinces.

Since December 22, 2014, the province of Tehran was also added to the system.

Checkavak will provide transparent information on the previous records of persons drawing checks; customers would therefore be able to assess the reliability of the checks they receive.

Also, check drawers can optimally manage their account balance.