EghtesadOnline: Check transactions and bad checks declined in the month ending April 21 soon after the new check law came into effect.
More than 6.9 million checks worth 1,480 trillion rials ($6.7 billion) were handled in the period down 27.8% in number and 42.7% in value compared to the month earlier.
The value of bad checks plunged 49.3% compared to the month before reaching 158 trillion rials ($665.2 million). In the same period the number of bad checks was reported at 569,000 down 25.4%, Central Bank of Iran data shows.
In terms of volume and value, bad checks accounted for 8.2% and 10.7% of the total drawn checks, respectively.
It’s worth mentioning that during the corresponding period last year 18.3% and 20% of the volume and value of all drawn checks were invalid.
In the reviewed period approximately 149,000 checks worth 65 trillion rials ($282.6m) bounced in Tehran Province, accounting for 7.7% and 9.7% of volume and value of checks written in the capital.
In terms of numbers, Kohgilouyeh-Boyerahmad Province topped the list of provinces with the highest ratio of bad checks to transacted checks at 13.5%.
Lorestan Province was next at 11.5% and Ilam third with a ratio of 11.3%. Provinces with the lowest ratio were Gilan 5.6%, Mazandaran 6.8% and Golestan 7.1%.
Decline in check transactions is partly linked to the fall in business activity and closure of markets during the two-week holiday season that marks the new Iranian year (started March 21).
Check transactions decreased also due to customers’ unfamiliarity with the new cumbersome banking rules that oblige issuers to register their full ID on special electronic platforms.
CBI officials earlier expressed concern about lack of public awareness about the new rules that demand strict terms for issuance, clearance and endorsement.
Davoud Mohamad-Baigi, the CBI deputy for payment systems, said "familiarizing the people with the new check law is a big challenge.”
The new law came into effect on March 25. It seeks to improve transparency by obliging check holders to register data on electronic platforms designed by the CBI. The new framework also aims to curb rubber and forged checks.
An integrated electronic system and electronic check-processing platforms have been introduced by the CBI to this end. Sayyad is one such platform designed to run a credibility check on account holders.
Check issuers are required to register data such as date of issuance, sum, and identity of the beneficiary with the Sayyad platform.
Banks cannot process checks that are not registered on the platform. The Sayyad system is accessible to check holders via banks’ internet gateways and cellphone applications.
The law bans checkbook holders from issuing "bearer checks". As the name suggests, bearer checks are payable to the person who brings the check to the bank.
With new clients getting accustomed to the new check rules, the number of registered data on electronic check transactions platforms has increased.
The CBI public relations office Saturday said more than 1 million checks were registered on the Sayyad platform up until Friday.
During the two months since the check law became enforceable, the ratio of bounced checks to issued checks was around 9% -- way lower compared to the same period last year.