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Journalism of Courage
MUMBAI, July 25: An Indian Banks’ Association (IBA) committee, headed by Bank of Baroda chairman K Kannan, is sorting out the details to channelise bank finance worth Rs 1,000 crore towards film-making following the granting of industry status to the filmdom. “Banks can finance up to one-third of the total expenditure, which is pegged at Rs 3,000 crore," said Kannan after chairing the first meeting of the committee.
However, the central government is yet to issue a notification conferring industry status to the film industry. He said that there is no tangible security against lending to film production and the collateral may not be of any worth.
Kannan said that extending assistance to film production would essentially mean “cash flow financing with securitisation of future receivables.” Distributors, who provide one-third of film financing, are the key in the link, he said, adding that distributors are both the strength as well as the weakness.“Distributors (who buy rights in advance) will have tobe assessed by banks,” Kannan said.
The committee had its first meeting here on Saturday and asked the Film Federation of India (FFI) to provide “a total step by step write-up” on what goes into film production.
Kannan said that “banks are not sure of the film industry” in the absence of accounts and project reports and stressed that they have to conform to some standards.
The committee will study all the three stages of production, distribution and implementation and assess the practicalities of financing film-making and submit its final report to the Reserve Bank of India, which will prescribe the prudential norms. Kannan said that the committee will consider whether the distribution, video and satellite rights are mortgageable and also if the insurance cover, including Export Credit Guarantee Corporation (ECGC) cover for film exports, would be available. Bank of Baroda general manager AR Kher said that the success rate of films is just seven per cent to eight per cent, indicating how risky theindustry is. BoB chairman said that as far as banks were concerned, assessment of a film project was a problem as everything depends on the perception of people. He said that the committee will dwell on the role of the National Film Finance Corporation which caters to the needs of art film-makers and also talks to general insurance companies on the provision of insurance covers for production.
