“Act on financial services promising excessive returns”…Analyst tells BoG, SEC

An investment analyst, Bernard Osei Tutu Jnr, is cautioning the public to be wary of investment firms promising excessively high returns even as short-term treasury bill rates continue to fall.

The 91-and 182-day T-Bill rates have been trending downwards since the beginning of the year.

As at Monday, June 19, the 91-Day T-Bill rate was 12.09 percent, while the 182-day instrument was going for 13.6 percent.

That notwithstanding, investment management firms are promising the public as much as 32 percent for funds, prompting concerns over the development.

Chief Executive Officer of Dusk Capital, Bernard Osei Tutu Jnr, in an interview with B&FT stated that: “If the banks are giving 15 percent for funds deposited with them for six months, why should investment firms continue to give as much as 30 percent? What are you going to use that money for? So the tendency that that money will go bad is higher.

We have a lot of non-performing loans already. Loans are not doing well, so what else are you going to put the money in so as to be able to pay such higher interest on funds.

These are things we are all seeing, both the regulator and everyone, but because it is a free market, nobody is talking about it.

Whether we like it or not it will come and catch up with us and I think again, the emphasis should be on the customers.”

The financial sector, over the past few years, has witnessed some challenging times. Customers, who were promised huge returns for their funds entrusted with DKM Microfinance and other similar organizations were left disappointed when the microfinance companies went bust.

The Bank of Ghana (BoG) is currently engaging directors of ASN Financial Services, a licensed Finance House, to find an amicable solution to the troubled indigenous institution.

The BoG’s intervention follows challenges by the company, which specializes in investment services, credit issuance, and mortgage products, to meet the demands of some of its customers for payment of funds invested.

Directors of the company have submitted their turnaround strategy that details, among others, the composition of a new board, the new shareholding structure and other concrete measures being adopted by the company, to the Central Bank.