EghtesadOnline: The number of bounced checks jumped in the month to March 19, marking the end of last fiscal year when the coronavirus spread in Iran hammering businesses in a way unseen in decades.
A total of 1.03 million checks worth 177 trillion rials ($1.1 billion) bounced in the month, according to a report posted on the Central Bank of Iran website.
The default was up 44.2% in volume and 51.9% in value compared to the month before. The troubling development is largely due to the fast-spreading covid-19 pandemic that has destroyed livelihoods, manufacturing, and businesses, and sent the world economy into freefall. Iran has not been spared.
Large-scale lockdowns to contain the deadly virus disrupted most retailers and small businesses, forcing them to either shutter, furlough workers, work and half capacity or file for bankruptcy.
Conditions took a turn for the worse after the government in Tehran ordered a total lockdown of retail trade, namely the key services sector on March 27. Many restrictions were in force up until last week as part of government’s social distancing scheme.
Restrictive measures were relaxed last week and low and medium-risk businesses were allowed to reopen as new infection cases declined.
As the country hit the hardest by the novel coronavirus in the Middle East, Iran has so far reported 92,584 covid cases since its outbreak in mid-February. The virus has claimed more than 5,900 lives, according to the Health Ministry.
Citing statements by the Labor Ministry about pandemic losses on various sectors, the government spokesman Ali Rabi'ie said earlier that the steepest downturn has been in the services sector.
As the pandemic reared its ugly head, the government announced a rescue package to help distressed businesses, including easing rules guiding bounced checks.
Earlier in the month, the CBI said those who issue checks with non-sufficient funds in their accounts and whose checks mature from Feb.21 to May 20 will be exempt from penalties that restrict their access to banking services, such as getting new checkbooks.
The waivers covered restrictions on issuing new checks to control the crisis and avoid further harm to already troubled businesses, and excluded other legal penalties, such as court action.
The rescue package included an estimated 750 trillion rials ($4.6 billion) in loans to help low-income households and struggling businesses.
The aid package is for ten businesses groups that are unable to meet their financial commitments as a result of hammering by the killer disease.
CBI data show that bounced checks accounted for 10.9% of all issued checks and 11.8% of their value in the month ending on March 19.
More than 331,000 checks worth 85 trillion rials ($531million) bounced in Tehran Province alone during the period under review, accounting for 10.4% and 10.8% in volume and value of checks.
The percentage in less-privileged regions was higher. Kohgilouyeh-Boyerahmad Province topped the list with the highest percentage of bad checks at 17.6%.
The harm in Kurdistan Province was 16.2%, the second highest, followed by Hormozgan Province at 14.6%.
Alborz and Yazd provinces each said 9.1% of issued checks were void. This was followed by Khuzestan and Gilan provinces, respectively with 9.5% and 9.6%.
According to the CBI, close to 9.5 million checks worth 1,494 trillion rials ($9.3 billion) were issued in the last month of previous fiscal year, up 11.2% and 22.6% in volume and value, respectively, compared to the earlier month.
More than 3.2 million checks valued at 790 trillion rials changed hands in Tehran Province in the period month.
Tehran had the largest share of exchanged checks (both in volume and value), accounting for 33.67% and 52.9% of all drawn checks.
Isfahan Province was second in volume and value, representing 10.7% of all drawn checks and 6.8% of the value of checks.
Banks cleared more than 8.5 million checks worth 1,318 trillion rials ($8.2 billion).
In the reviewed period, over 2.9 million checks valued at 507 trillion rials were cashed in Tehran Province.
More than 933,000 cashier checks worth 1,769 trillion rials ($11 billion) were cleared -- up 4.5% in volume and 10.6% in value compared to the previous month in the Iranian calendar.