The regulations in Circular 13 are thought to tighten credit in the time to come. What would you say about that?

Tran Du Lich: I think the regulations in Circular 13 are correct and necessary because they are close to international standards. In China, for example, commercial banks can only lend up to 75 percent of the total mobilized capital, not 80 percent like in Vietnam. Meanwhile, the required capital adequacy of nine percent will help create safety for the whole banking system.

However, I think it is necessary to reconsider one thing. The circular stipulates that the demand deposits by economic institutions must not be counted as bank mobilized capital. If so, this will put big difficulties on bank operations.

Banks claim they do not have time to prepare for its implementation. Do you think we need to delay the circular’s deadline to create more favourable conditions?

Lich: I think it is difficult to delay implementation. The legal document was promulgated in May 2010. Therefore, banks need to prepare themselves step by step and make reports to the central bank before the document officially takes effect on October 1.

Do you think interest rates will continue decreasing?

Lich: Interest rates have dropped recently, which should be seen as a big effort by the banking system. The expected inflation rate is eight percent, while the average deposit interest rate is now at 10.5 percent per annum. As such, depositors can enjoy real positive interest rates. However, the gap of 2.5 percent is not high enough to mobilise capital easily.

Meanwhile, a big volume of treasury bonds has been issued over the last five years, worth 56,000 billion dong, which has attracted money from commercial banks. Therefore, banks have nearly run out of money and they don’t have much more money to lend. Therefore, interest rates are not likely to decline sharply.

To ease interest rates, the expected inflation rate needs to be curbed at seven percent instead of eight percent. Besides, the State should not raise more money from the public.

What do you think about the credit growth rate in the last seven months, at 12.96 percent as declared by SBV?

Lich: By mid-August 2010, the credit growth rate reached approximately 14 percent. Therefore, I think the target of 25 percent in credit growth rate set for 2010 is attainable. In case we cannot reach that goal, it will not be a big problem.

But will the low credit growth rate this year lead to stagnation of the national economy in next year?

Lich: I think whether credit can grow well or not still depends on market demand. In fact, businesses now cannot expand. Therefore, if trying to expand credit at this moment, capital may flow to real estate or the stock market, which will be dangerous.