A Place to End the Anxiety of Invalid Checks

Pay attention to these figures; they are astonishing and remarkable. The number of bounced checks in the year 1395 (2016) reached approximately 16 million and 850 thousand, with the value of these bounced checks exceeding 136 trillion tomans. According to the Central Bank of Iran, in 1395, the ratio of bounced checks to exchanged checks was 15 percent. A year later, in 1396 (2017), the number of bounced checks increased to about 17 million and 400 thousand, with the value of these bounced checks surpassing 161 trillion tomans, raising the ratio of bounced checks to exchanged checks to 15.4 percent. For economic experts and observers, the increase in the number of bounced checks is a sign of growing uncertainty in the business environment and rising risks in economic activities. Another interpretation by experts regarding the growth of figures related to bounced checks is the dominance of recession in the macroeconomic space and the disruption of the order and system of businesses, which has prevented check issuers from fulfilling their financial obligations. According to the latest report from the Central Bank of Iran, the number of bounced checks by the end of October this year reached 8.8 million, with a total value of bounced checks in these seven months amounting to about 94 trillion tomans. In all reports related to exchanged bank checks, the most significant reason for the bouncing of these checks, accounting for over 90 percent, is insufficient or lack of adequate funds, while reasons such as signature discrepancies or check content issues, erasures, and inconsistencies between numerical and written amounts account for less than five percent in total. These numbers and figures only represent part of a broader picture of the financial turnover and volume of economic exchanges in Iran related to bank checks. Bank checks in the Iranian economy have taken on the responsibility of conducting financial transactions and have also served as a tool for guaranteeing the financial obligations of parties in a transaction or contract. Over the years, this approach and use of bank checks have organized financial turnover and exchanges in the Iranian economy; however, this very method of using bank checks has also become part of Iran's economic problems. This aspect of the problems arising from the proper and improper use of bank checks prompted members of the Islamic Consultative Assembly to draft a plan this summer to amend a forty-year-old law to address some of the issues associated with the use of bank checks, the last amendment to the check law dating back 15 years. The main argument of the drafters and supporters of the check issuance law reform was the high statistics of check prisoners, the organization of the checkbook issuance process, and the reduction of risks arising from issuing invalid checks. Hassan Norouzi, spokesperson for the Legal and Judicial Commission of the Assembly, outlined the objectives of the drafters of this amendment during its review in the Assembly, including "predicting a precise and strict mechanism for opening accounts and receiving checkbooks, setting credit limits, and also predicting color coding for each check, creating an electronic check file, and enabling individuals to access information from this system, eliminating the litigation process regarding bounced checks, predicting the possibility of issuing electronic checks, and recognizing the joint responsibility of the bank." The amendment to the check issuance law passed all legal approval stages at the beginning of this week and was communicated for implementation to the relevant authorities. One of the changes considered in the new amendment to the check issuance law is the credit assessment of checkbook applicants in banks. A significant portion of the desired changes in this amendment is based on infrastructures that have been established in recent years in the Central Bank and the banking system, such as the Chekavak and Sayad systems (integrated electronic checkbook issuance), which facilitate the concentration of information and evaluation of banking customers and ensure the implementation of the new amendments to the check law. According to the new law, whenever a check is not paid, the bank is obliged, upon the request of the check holder, to immediately register its non-payment in the Central Bank's integrated system and to provide the reason for non-payment in a certificate to the applicant upon receiving a tracking code. After this stage, all accounts of the issuer of the bounced check in the banking network, including other banks and credit institutions, will be blocked. Opening any account and issuing new bank cards for the issuer of the invalid check will be prohibited, and the payment of banking facilities or the issuance of foreign and rial guarantees for the issuer of the check will be halted. Another noteworthy point in this amendment is the sharing of information and records of issuance and payment of banking customers and checkbook holders in a unified system accessible to the Central Bank and judicial authorities to facilitate online inquiries. Other changes in this amendment have been considered to make the use of the most widely used transactional tool in the Iranian economy easier and safer. However, the question remains whether these measures outlined in this amendment can achieve the lawmakers' goals. One of the opposing representatives, Mohammad Reza Sabaghian, stated during the review that he does not see the lack of appropriate laws as the problem but rather the incomplete and inaccurate execution by implementers as the main issue related to checks. Of course, the measures anticipated in this amendment have different focuses; the first focus is on transparency, unifying information, and utilizing online data and information systems, while the other is based on strictness, imposing restrictions, and overall penalizing offenders to ensure the law's enforceability. All these matters, with golden signatures, special recommendations, or access of human resources to the integrated network and system or changing its data and usual exceptions in Iran's administrative space, could discourage the drafters of the amendment and judicial and banking authorities from its effectiveness. Another concern in this regard is the potential loss of the check's efficiency as the most practical and easiest payment tool and means of guaranteeing contract agreements for installment purchases. One can wait to see whether, a few months after the implementation of this law, economic actors are happier about the reduced risk in their transactional space or prefer smoother transactions, even if the shadow of the nightmare of losing their assets and capital with invalid checks still looms over them.