A woman in Malaysia recently took to social media to share how termites had eaten through a pile of RM20 (S$6.30) notes kept in her cupboard, with losses totalling RM2,000.

Photographs of the mutilated notes show either its edges or significant parts missing, prompting netizens to suggest exchanging the notes at a bank.

In Singapore, a hawker in Hougang received a tampered $10 note from a customer on Aug 2.

The portrait of Singapore's first president Yusof Ishak, which is featured on the note, was seen with a piercing stare and a "shaved off" mustache.

It was later inspected and authenticated by bank staffs from DBS and OCBC to be genuine.

OCBC staff also offered to exchange the note for him, though the hawker eventually decided to keep it as a memento.

So, what happens if you find yourself holding on to such torn or defaced notes?

Policy on mutilated currency

Both Singapore and Malaysia have standing policies on handling mutilated currency.

In Singapore, damaged notes and coins command no value under the Currency Act. 

On the Monetary Authority of Singapore's (MAS) website, the central bank states: "No person is entitled to recover from MAS the value of any mutilated note or coin. Merchants may also refuse to accept mutilated notes or coins."

However, the authority also added that it may, out of goodwill and at its absolute discretion, award value for a mutilated currency note or coin.

This is provided that there is no evidence suggesting that the note or coin has been wilfully or deliberately mutilated.

Over in Malaysia, Bank Negara Malaysia (BNM) states on its website that unfit currency — whether defaced, mutilated or otherwise damaged — may still hold value.

"Take the opportunity to exchange them at the bank," BNM added.

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Assessing value: MAS 

MAS applies a two-stage assessment for mutilated notes under two conditions:

The note has been validated to be authentic.

There is no evidence to suggest that the note has been wilfully or deliberately damaged. Supporting evidence leading to the mutilation will be assessed for its reasonableness. 

If the the criteria in the first stage is met, the mutilated currency note will be assessed for its refund value based on the portion of the note remaining.

In the case of a mutilated currency note with at least two-third of its original note present, a full refund of the note's value will be accorded.

Where more than one-third, but less than two-third of the original note is present, only half the note's value will be refunded.

There is no refund for mutilated notes with one-third or less of the original note present.

If two or more portions of a note are present, the refund value that may be paid will be assessed based on the sum of the individual portions presented, MAS said. 

This is provided the portions are from the same note, it added.

Details on its assessment criteria, including for mutilated coins are available on MAS' website. 

Assessing value: BMN

BMN's guidelines to financial institutions in Malaysia is to reimburse customers on the same day, provide that the size of the mutilated currency note is two-third or more of the original size.

In addition, the mutilated currency note must not contain any marking on the portrait of Tunku Abdul Rahman.

There must also not be any markings, writing of words, figures or other inscriptions.

Cases that are indicated as "not straightforward" include notes which are ink-stained, burnt, or termite-infested.

Notes which are torn, or defaced with markings, writings or inscriptions will need to be assessed by BMN.

The assessed value of the mutilated note(s) will be refunded into the holder's account after assessment.

More information on BMN's policy on mutilated currency can be found on its website.

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editor@asiaone.com