KUEN-phen financing model for the financially disadvantaged

It is a grant and loan that is interest, collateral and guarantor free

The Royal Monetary Authority (RMA) launched the KUEN-phen financing model, which will raise funds through an innovative mix of crowd sourcing and bridge financing.

KUEN-phen is a not-for-profit undertaking spearheaded by the RMA in collaboration with the Royal Securities Exchange of Bhutan (RSEBL) and Bhutan Care Credit Limited (BCCL).

The platform will provide opportunities for the financially disadvantaged, people with special needs, vulnerable and marginalized segments to engage in meaningful economic activities solely for livelihood enhancement of the people.

KUEN-phen will provide grants and loans that will be interest, collateral and guarantor free, however beneficiaries need to do micro business.

As empowered by the section 8(e) of the RMA Act and RMAโ€™s vision of reinforcing stable and inclusive economic growth, financial inclusion is of high priority and recognized strategy in achieving inclusive access to finance. The KUEN-Phen financing is an implementation part of creating an inclusive finance for the unserved and underserved segment of the population under the National Financial Inclusion Strategy 2018-2023.

KUEN-Phen also aligns to the mobilization of crowd sourcing through the registered crowd funding platform provider of RSEBL under the crowd funding rules and regulation 2019.

An official from the RMA said that the initiative is geared towards providing an inclusive financing platform to stimulate the current crowd funding platform and opportunities for the financially disadvantaged, people with special needs, vulnerable and marginalized segments to engage in meaningful economic activities solely for livelihood enhancement.

The official mentioned that in order to access funding through the model, a beneficiary must first get broad crowd support by raising at least 20% of the total requirement through crowd funding.

To ensure the sustainability of the model and have a wider impact of the crowd-sourced funds, the funding will be provided to a beneficiary in the form of 15% grant and remaining as an interest free loan through bridge financing. A 5% service fee will be deducted to cover costs of administration and loan recovery. Beneficiaries are not required to provide collateral or guarantor. Beneficiaries who can crowd source at least 20% of the requirements will unlock access to the KUEN-Phen Revolving Fund for the remaining funding requirement.

Funds sourced through the crowd will be used through a re-lending framework to help more beneficiaries. The initial funds for the bridge financing will be provided through a Revolving Fund set up by the RMA.

To create this opportunity to transform numerous lives, KUEN-Phen financing in itself is a micro-business facilitation package offering additional pre and post mentoring and monitoring supports. One of the salient features of KUEN-Phen financing is that the financing opportunity up to Nu 0.5mn is collateral, guarantor and interest free.

The Governor of RMA, Dasho Penjore and Zimpon Wom Pema Rinchen launched KUEN-Phen financing on March 25 during the global money week, which was from March 22-28. The RMA plans to go live with hosting beneficiaries or campaigners towards the end of this month.

Dechen Dolkar from Thimphu