Banks ordered to suspend service of converting into $2 banknote

The State Bank of Vietnam, the country’s central bank has ordered some banks to suspend the service of converting into $2 banknote for lucky money in Lunar New Year, the Dau Tu newspaper reported.

Usually, at year end, the market is busy with service of converting small changes for lucky money in Lunar New Year. This year, many people are en massing to do conversion, which is considered to be some unhealthy behaviors, so regulators were forced to take actions.

According to a banking official, supply of small changes to meet commercial banks’ year-end demand is not short, but SBV’s message is not to boost banknotes with small face value in circulation.

Factually, the Central Bank always provides different kinds of banknotes with different face value to commercial banks who then will meet customers’ need. Consumers’ demand for small changes for lucky money in Lunar New Year is available with a purpose of giving lucks to receivers.

However, recently, the service of exchanging banknotes with low fac value on the market is becoming brisk and causing a collection of high exchange fees, up to 15-20% of value of amount for conversion, even higher.

Therefore, it is said that converting low-valued banknotes should not be pushed to become a unhealthy movement on which many people will abuse to seek profits.

But the conversion (low-valued or new banknotes) at commercial banks is not easy for all customers in Lunar New Year.

Not only the dong, but also high-valued US dollar banknotes are converted into $2 banknote which is seen as rare at this time.

Here, banks apply a fee of 3,000 dong for each $2 banknote converted from $50 or $100 ones; 4,000 dong for each new $2 banknote converted from $5, $10 or $20 banknotes. With such high fees, a lot of customers still accept to pay to take the expensive $2 banknotes for Tet lucky money.

Yet, after a short-time implementation, SBV ordered relating banks to stop the conversion service.

Nguyen Hoang Minh, Deputy General Director of SBV-HCM City arm said that some banks’ service of converting high-valued banknotes into $2 ones for lucky money was criticized strongly.

To have a supply of $2 banknotes, banks also have to import from foreign countries with a relatively high fee. So, as converting, banks are forced to collect high fees as well.

For another hand, banks must have US dollar source for importing lower valued notes. Thus, Saigon Commercial JS Bank or SCB, who launched the service of converting $2 banknotes, had to stop it.

Factually, on the free market, many currency exchange points still do this with high fees at the moment.