The State Bank of Vietnam (SBV) has decided that the outstanding loans of commercial banks funding securities investment must not exceed 3% of the banks’ total outstanding loans. How would you comment on the opinion that the 3% ceiling level is too low?

Borrowing money to inject in securities trading proves to be very risky business. Therefore, banks should not focus on loaning for securities investment, or they will face big risks. I believe that SBV has made thorough studies of this issue and it only made the decision after considering trustworthy statistics, for example, the statistics about the cash flow from banks to the stock market.

As far as I know, the loans given to securities investors by state owned banks, which hold 70% of the credit market, just accounts for 1-2% of their total outstanding loans. The percentage of loans given for securities investment is higher for joint stock banks.

Some bankers have protested the decision, saying that the central bank was involving itself deeply in bank operations. What would you say to this?

I know that there are joint stock banks, which, running after profit, are ready to give loans any time they can find clients. While state owned banks have the credit growth rate of 20% only, the figure for joint stock banks is much higher.

It is necessary to take actions to ensure the safety of the monetary market as well as the capital market in the long term. Of course, I think that the central bank should keep watch over the market’s performance and the impact of the decision, in order to make adjustments if necessary.

Economists recently have talked much about the excess of banks in Asian countries. They also have said that there are too many banks in Vietnam. What is your comment about this?

The requirements for establishing new banks in accordance with the newly enacted decision will surely be very strict. This will help set up barriers, making the establishment of new banks very difficult, especially small banks.

However, I think that we should still consider the situation thoroughly to find out how many banks are enough for the national economy. If the operational banks are enough already, we should have suitable measures.

Setting up banks seems to be a new tendency of investors. Many localities and general corporations are moving ahead with plans to set up their own banks. Do you think it is a good thing?

I think it is a worrying problem. The central bank should thoroughly consider applications for setting up new banks. It should only licence large banks which have qualified staffs.

It is clear that banking, unlike other kinds of business, is a special industry. If strict requirements are not set we will have to restructure the banking system again, which we have just completed. (Tiền Phong)