Post Bank, AAR Credit in loan offer deal

 By Macharia Kamau

Post Bank customers are set to start receiving credit following a partnership between the bank and AAR Credit Services.

The partnership will give the bank’s clients access to loans from AAR Credit Services – a micro finance institution affiliated to AAR Health.

Loan products offered under the partnership will be mostly targeted at individuals and small enterprises. The loans would be repaid over a 24 month period and attract an interest rate of two per cent per month.

The bank has been operating as a savings bank in its 100 years of existence and is not bound by the law that formed it from advancing loans to customers.

There have been plans to review the law and expand the bank’s role. Kenya Post Office Savings Bank Act lists the bank’s main activities as encouraging thrift and providing opportunities for saving.

"Offering credit services has been a major need for our customers. Our customers’ need today are different from when Post Bank started out and that is why we are getting into this partnership," said Nyambura Koigi, the managing director.

"Discussions are still going on with Government on amending the law to enable us offer credit to customers, but as we seek an amendment to the law, we are sure that the partnership will providing credit to customers."

John Kariuki, Managing Director AAR Credit Services, said the service has been on a pilot test since October last year.

"We are lending about Sh40 million a month to Post Bank customers alone, but we have the capacity to lend over Sh400 million a month," said Kariuki.

He added that his firm would bear the risk while vetting credit worthiness of Post Bank customers applying for loans.

AAR Credit Services is an offshoot of insurance firm AAR licensed as a non-deposit taking micro finance institution.