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EghtesadOnline: Data released by the Central Bank of Iran shows check transactions declined remarkably in the month ending Oct 22.

More than 5.4 million checks worth 2,005 trillion rials ($6.7 billion) changed hands indicating 25.7% decline in number and down 19.8% in value on the month earlier.

While retail transactions normally are higher in this calendar month marking the beginning of the school year, observers link the decline to other factors.

The Persian-language economic newspaper, Donya-e-Eqtesad ascribes the decline to three main factors: the overall decline in demand, aversion to buy on credit due to economic uncertainty and lack of familiarity of the people with the new check rules that came into effect in mid-March.  

Of the total checks drawn in the month, 1.5 million valued at 1,004 trillion rials ($3.4b) were issued in Tehran Province accounting for 28.5% of the total number and 50.1% of the value of all checks.

Isfahan Province was second with 10.7% and 7% of the volume and value, respetively.



Bad Checks

In tandem with the decline in all checks, bad checks dropped sharply in the reviewed month.  The total value of bounced checks was down 16.6% on the earlier month reaching 262 trillion rials ($875m).

By the end of the month the number of bad checks was reported at 476,000 down 32.9%. In terms of volume such checks accounted for 8.8% -- the lowest in six months.

In value terms, however, bad checks represented 13.1% of all drawn checks in the month to hit a three-month high.

It’s worth noting that during the same time last year, 8.3% and 9.9% of the volume and value of all drawn checks were rejected for various reasons.

In the reviewed period, about 122,000 checks worth 127 trillion rials ($453.6m) bounced in the capital, accounting for 7.9% and 12.6% of the volume and value in the sprawling metropolis now home to more than 12 million people.

In terms of numbers, Kohgilouyeh-Boyerahmad Province topped the list with the highest ratio of bad checks to transacted checks at 13.2%. North Khorasan Province was next at 12.4% and Lorestan third with a ratio of 12.3%.

Provinces with the lowest ratio were Gilan at 6.2%, Alborz 7.8% and Khuzestan 8%.

Insufficient funds in the accounts of issuers were the main reason why the checks were rejected. More than 96% of checks were rejected because of lack of money.



Cashier Checks

Around 416,000 cashier checks worth 1,514 trillion rials ($5.1b) were cleared -- down 21.4% in volume but 12.4% higher in value.

More than 136,000 checks worth 1,067 trillion rials ($3.6b) 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.

The CBI report covered only interbank checks processed by Chekavak, a CBI-affiliated electronic check processing system, and did not include those circulating within branches of one bank.


transactions Check