The Hindu Business Line : IDBI doubles exposure to film financing

For the year ended March 2006, IDBI has offered Rs 177 crore as loans for various film projects. "Of this, Rs 80 crore has been advanced for projects that are on the floor," Mr Jitender Balakrishnan, Deputy Managing Director, IDBI Bank, said.

Unlike the financing pattern used for lending money to sectors such as steel, infrastructure, power, IDBI's film financing portfolio is project-oriented. Loans are given to individual producers on the basis of how their films have fared in the past, the project's strength, the producer's financial capability and his track record of completion of film. "We insist on completion guarantee," Mr Balakrishnan said.

Risky business

The biggest risk in film-financing is the completion of the project. IDBI has tied up with the film processing laboratories to ensure that the release of the films would take place only on debt repayment.

IDBI has set up a cell comprising two to three persons from within the bank to work on each of the film projects that seek funds. Additionally, an advisory team of people drawn from the industry - producers, distributors, actors and film critics - make an assessment of the projects. "The ad hoc committee can only make recommendations. We act on these recommendations," he said.

Institutional debt is slowly becoming part of the financing of the country's film industry. IDBI and Exim Bank have taken a lead in disbursing debt to this sector. Both these banks have offered loans not just to the Hindi film industry but also other language filmmakers, particularly Tamil, Telugu and Kannada films.

IDBI, which offers film finance at rates exceeding its PLR by 1.5 to two per cent, has also offered lines of credit to film producers. Apart from the specific film-financing portfolio, IDBI does offer debt to the entertainment sector for setting up malls, studios or offering small corporate loans for equipment. But within the film financing portfolio, IDBI has only extended funds to the production side and not to the distribution and the exhibition side of the value chain.

The bank is in talks with the two film completion bond companies in India but as yet is not insisting on completion bonds. "Completion bond would further add to the cost of the film. We would insist on it if the project cost is very high," Mr Balakrishnan said. IDBI does not extend loans below Rs 4 crore and does not fund the entire project cost. But the bank does check the veracity of funds brought in by the producer or the film company.

More Stories on : Private Banks | Cinema | Interest Rates

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page

Stories in this Section
UFBU plans stir against outsourcing

Convertibility: Where angels fear to tread

Insurance cos bullish on unit-linked plans

UTI Bank opens branch in Singapore

IDBI doubles exposure to film financing

Andhra Bank plans voice-enabled ATMs

IOB's insurance scheme for NRIs

CVC rejects Ministry's request to review control over PSB officials