The value of bounced checks reached 312 trillion rials ($1.24 billion) in the month to March 20, up 37.7% on a monthly basis
In terms of volume, dud checks increased 9.5% compared with the earlier month at 763,000, according to data published by the Central Bank of Iran.
Bounced checks accounted for 7.9% of the total number and 12.1% in value of checks drawn in the mentioned period.
About 197,000 checks valued at 157 trillion rials ($628 million) bounced in Tehran Province, accounting for 6.6% and 11.9% in volume and value of the total checks issued in the capital, respectively.
The ratio of bad checks to transacted checks in Kohgilouyeh-Boyerahmad Province was 15.8%, the highest among all provinces. North Khorasan Province was next with a ratio of 12.6%. Lorestan Province came in third with 12.2%. Provinces with the lowest ratio were Gilan 6.1%, Alborz 7% and Yazd 7.5%.
Insufficient funds in the accounts of issuers were the main reason for rejecting the checks. The CBI unveiled a new rule on check transactions last month to improve transparency in the check system and curb rubber and forged checks. It unveiled checkbooks designed to comply with the new regulations.
As per the new rules, check holders are obliged to register their complete ID on electronic platforms created by the CBI. Banks will not process checks that are not registered on these platforms.
Rise in Drawn Checks
According to the CBI, the number of drawn checks rose from 8.6 million to 9.6 million, 11.7% higher during the month.
The total value of drawn checks was 2,582 trillion rials ($10.32 billion) to indicate a 26.9% monthly hike. More than 3 million checks worth 1,318 trillion rials ($5.27b) changed hands in Tehran Province during the month.
Tehran ranked first with the highest share of exchanged checks in volume and value accounting for 31.3% and 51.1% of the drawn checks. Isfahan Province was next representing 11% of the total issued checks in volume and 7.1% in value.
The data excludes checks circulated within branches of a single bank and covers only interbank checks processed by Chekavak, a CBI-affiliated electronic check processing system.
More than 857,000 cashier checks worth 1,752 trillion rials ($7 b) were processed showing 23% and 29.1% rise in volume and value, respectively. An estimated 274,000 checks worth 992 trillion rials were cashed in 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's checks are treated as guaranteed funds because the bank, rather than the purchaser, is responsible for paying the amount.
Earlier in the month, the Majlis approved provisions of a government-backed bill that calls for improving transparency in transacting cashier checks.
Cashier checks henceforth have to be registered on special electronic platforms. In addition, such checks cannot be transferred by endorsement and must be cashed only by the person whose name and identity is written on the check.
Caption: In terms of volume, dud checks increased 9.5% compared with the earlier month.
