With the Lunar New Year two months away, there is rising demand for small denomination bank notes for lucky money or votive gifts and bank staff have used this demand to make more money.
Demands for new small banknotes rise as Tet nears
If there is sufficient amounts of small banknotes in the vault, bank staff are often given VND5m (USD227) worth of small banknotes for their family and close acquaintances. Higher personnel can be given higher amount of money.
A banking employee in Hanoi, who wished to remain anonymous, said, "demand for small denomination banknotes is palpable every year. Everyone asks me to exchange small banknotes for them."
She went on to say that employees of commercial banks would definitely have higher amounts of banknotes to exchange. However, some employees collect small banknotes then gave them to other people to open exchange service outside to earn money from charging more for the notes, she said.
Nguyen Tri Hieu, an independent director on the board of Ocean Bank, said, "A regulation issued by the State Bank in June stated that people could exchange worn-out or damaged bills at banks without any additional fee. But in reality, this exchange is difficult as banks often claim that they are running out of small banknotes."
Meanwhile various exchange service stalls pop up on the streets and at many jewellery shops. In order to provide new small banknotes, these service providers work with bank employees. Last Tet Holiday, in order to change VND50,000 into VND10,000 notes, customers had to pay VND5,000 in fees. The service fees get higher with smaller value notes. Many providers offered to get 80% of total money worth in exchanging for VND500 banknotes.
"Small banknote exchange service outside banking system was banned but still occur because the regulations still have loopholes," Hieu said.
