The government has identified Cottage and Small Industry (CSI) sector as one of the important jewels in driving Bhutan’s economic diversification. It is also one of the largest sources of domestic production and employment.
Given this importance, the Royal Monetary Authority launched the crowdfunding portal and issued an approval for Bhutan’s first CSI bank yesterday during the Bhutan Economic Forum for Innovative Transformation (BEFIT) 2019. This is expected to ensure better access to financing for young entrepreneurs and CSIs.
Bhutan Crowdfunding is the first digital platform developed by the Royal Securities Exchange of Bhutan. The platform which is a first of its kind will aim to provide an alternative financing model for start-ups, new business ventures and, CSIs in Bhutan to access funds from the public. It will also offer entrepreneurs the opportunity to raise funds for their new businesses and at the same time provide new investment avenues for the public.
Crowdfunding is the practice of funding a project or venture by raising small amounts of money from a large number of people, typically via the Internet. Crowdfunding is a form of crowdsourcing and alternative finance. This modern crowdfunding model is generally based on three factors: the project initiator who proposes the idea or project to be funded, individuals or groups who support the idea, and a moderating organization (the “platform”) that brings the parties together to launch the idea.
The Finance Minister during the event said that the country cannot catalyze CSI growth unless better access to financing. Therefore he said the initiative befit the government’s vision of inclusive economic growth.
Meanwhile, the RMA also issued an approval for Rural Enterprise Development Corporation Limited (REDCL) to be the first CSI bank to operate. The bank will be a specialised bank, catering to the financing needs of the CSIs. REDCL was incorporated to provide fund for the non-formal rural activities on a low-interest rate and without any collateral requirement in order to stimulate economic activities and add value to the domestic resources and create employment.
