Lights, camera, inaction

Says renowned filmmaker Shekhar Kapur: “Entertainment business is a business of individuality, and corporatisation of the industry will kill this individuality and creativity — crucial aspects for successful filmmaking. The bureaucracy of the corporate world is not better than that of the government machinery. Once the corporates and banks enter this business, the strict norm put forward by these institutions will clip the wings of the creativity of a director.“

Yash Chopra, a Bollywood doyen, says banks and institutions should not approach the film industry with preconceived formulas. “If they are serious about financing films they ought to change their mindset. Now they are labelling the industry as 'risky.' They should remember that risk is involved in every business.

“They can sanction thousands of crores of rupees to any other industry, but when it comes to film financing they seek collaterals and numerous mandatory norms to pass even Rs 5-10 crore. This is ridiculous. If that is the case, how can a talented and creative person come up in this profession? Bank norms do not allow more than 50 per cent of the total project amount. This is ironical — if one can mobilise the initial 50 per cent, why does he need the backing of a financial institution (FI) or a bank?“

The actual irony is even two years after the Reserve Bank of India okayed institutional lending to the film industry, only very few crores of rupees have been disbursed to the industry. A small-time producer, a victim of the hassles of institutional funding, says: “One finds terms like 'mortgaging of fixed assets,' 'giving competition bonds,' 'sharing of overflow profits' difficult to comprehend. FIs and banks fund just the last 30-40 per cent of the project amount, which is of no use to a producer as finance is required in initial stages and not at the time of releasing the film.“

Industry sources point out that film producers, who have to borrow from unorganised sources in the absence of institutional lending, typically pay a 36-per cent rate of interest, 'payable in advance.' In contrast, IDBI charges 16 per cent, and its recoveries, at least so far, have been 100 per cent. Film industry observers say a bank could easily get around 18 per cent.

Movie stalwarts like Shyam Benegal, Ketan Mehta and Mani Ratnam, however, favour funding by FIs and banks. “Funding by banks and corporates will open up new avenues for funding for various kinds of cinema,“ says Benegal. Concurs Amit Khanna of Reliance Entertainment: “Filmmaking is a creative work, but it needs enterprise governance.“