The spread of the coronavirus and the measures taken by the government in order to prevent the situation from worsening have ramifications on the economy and the economic system. Among these, they are causing cash flow difficulties for many households and businesses. As a result, there has been an increase in the number of checks being returned and account being restricted. Beyond the prohibition on withdrawing checks, restricting an account interferes with the customer’s business, damages his reputation, and harms his ability to take financial action.
In order to assist those businesses and households that are encountering unexpected cash flow difficulties, the Supervisor of Banks has determined, based on her lawful authority, that the commercial banks and the postal bank shall suspend restrictions on customers and on their bank accounts as a result of checks returned due to insufficient funds as of March 4, 2020 and in accordance with the period set out in the law. The suspension means that a check deposited from that date that has been returned due to insufficient funds will not be considered when counting checks for the purpose of imposing a restriction under the law. If this is the tenth check, which should have led to a restriction on the account, the restriction will be suspended until the Bank of Israel publishes a notice regarding the end of the suspension period.
The system to located restricted accounts on the Bank of Israel’s website will contain a clarification that checks that are returned during the suspension will not be included in the information presented by the system, and check recipients must take this into account when receiving payment by check.
It is emphasized that, despite the fact that the account will not be restricted, information regarding the return of the check will be sent to the credit data sharing registry that is used as a basis for calculating the credit rating of the customer who paid with the check that was returned. Furthermore, despite the fact that accounts will not be restricted during the suspension period, collections proceedings can be opened through the Enforcement and Collections Agency (in accordance with the information published by the Enforcement and Collections Authority) regarding any check that is not honored.
Supervisor of Banks Dr. Hedva Ber said, “The Bank of Israel is taking a variety of steps to make it easier for households and businesses to get through the difficult economic period facing the country due to the spread of the coronavirus. The suspension of the counting of returned checks will halt the rapid increase in the number of restricted customers in the economy, and will reduce the difficult results due to the restriction of an account under unexpected circumstances. I call on the public to continue managing their financial affairs knowledgably, and to avoid the ramifications of paying with checks without cover.”