On May 23, the People's Bank of China released a circular on problems relating to rubber checks. The circular said that the central bank and its branches will impose administrative penalties on those who sign rubber checks.
In 2004, about 100 billion yuan (US$12 billion) worth, at face value, of rubber checks were signed in China.
The circular prescribes a fine between a minimum of 1,000 yuan (US$120) and up to 5 percent of the face value of the check, whichever is the higher. The fines will be imposed on persons who write rubber checks without an intention to defraud. The circular further regulates how penalties for rubber checks will be enforced.
To further intensify its supervision and management of rubber checks, the bank will set up a "blacklisting" mechanism in all its branches, and shall disclose such information to other banks where necessary.
According to Yi Xianrong, financial research director of the Academy of Social Sciences, the rise in non-cash settlements has seen a corresponding rise in incidences of fraud, especially by way of rubber checks. However, China currently has no legal provisions to deal with rubber checks. Many enterprises have suffered losses as a result.
(China.org.cn by Wind Gu May 31, 2005)
