Banks must take advantage of the six-month grace period for enforcement of overdraft reforms to educate and pressure the public to fix their credit frameworks, financial consultants said Thursday. "This is an opportunity for banks to closely examine those banking customers with overdrafts. Over the next six months, there will be red flags and checks will be returning, putting pressure on customers to arrange their credit frameworks," said Ronnen Norni, joint CEO at Obelisk financial consulting, in an interview with The Jerusalem Post. "Banks are likely to act as a filter. We see a threat here for small and medium-sized businesses and individuals in financial distress," Norni added. Dun & Bradstreet, the business information company, forecasts that in the first quarters of 2006, up to 25 percent of Israeli businesses might face the threat of closure compared with 20% today. The D&B survey revealed the current annual overdraft level reached NIS 3.5 billion with 60,000 private bank accounts in excess of their credit limits and 2 million checks bouncing annually. "The adjustment period is a necessary step in the right direction. It will be necessary to use this grace period in order to 'educate the public' to get used to the new credit norms that lie ahead of them," said Ella Fried, head of the analytical section at D&B. In a survey, conducted two weeks ago, D&B found that only 20% of private banking customers had gone into their branches to fix their credit frameworks, which was mainly due to a lack of awareness and understanding regarding the new overdraft directive. During the transition period, the banks have been granted broad discretion over whether or not to honor customers' checks and payments, even if they have not arranged credit frameworks. Analysts cautioned the public to take the reforms seriously and not assume the extension from Supervisor of Banks Yoav Lehman means the changes won't be implemented. "There is no doubt that the overdraft directive will be put into force and I believe, this time, no later than July 1, 2006. The adjustment period makes sense for both the banks and their customers," said Yuval Ben Ze'ev, analyst at Clal Finance Bitucha. Blaming the country's banks for not being ready to implement the overdraft reform as planned on January 1, the Bank of Israel said banks may grant or renew credit frameworks during the interim period for business borrowers who have not completed their financial reports within prearranged deadlines. The aim is to prevent credit distress in the business sector, especially among small businesses. On request by the Knesset, the Bank of Israel is currently working on a public campaign to wake up the public.