Says
IndusInd
Bank
MD&CEO
Bhaskar
Ghose:
"My
bank
had
thought
of
going
for
film
financing
in
2001-02,
but
then
we
had
to
drop
the
idea,
partly
due
to
the
fact
that
the
film
industry
was
not
doing
well
at
that
time.
Although
we
have
not
dropped
the
idea
for
the
same
as
yet,
we
have
no
immediate
plans," while
Dena
Bank
CMD
PL
Gairola
admits
that
"barring
financing
quite
a
few
tele-serials
in
the
past,
we've
not
done
any
financing
for
films
so
far".
Nevertheless,
he
clarified
that
the
bank
is
open
to
any
such
proposals,"if
there
is
a
good
star-cast".
Normally,
bankers
charge
a
whopping
interest
of
16%-17%
for
the
funding
of
a
film.
But
the
entry
of
Exim
Bank
into
the
sector
has
changed
the
situation
as
it
has
brought
down
the
interest
rate
to
some
extent.
"Exim
Bank
has
changed
the
equation
of
film
financing
as
they
charge
on
LIBOR-plus
1
(London
Inter-Bank
Offer
Rate)
rates
which
is
comparatively
lower
than
the
interest
rate
being
charged
by
other
banks
and
financial
institutions
that
charge
interest
on
MIBOR
(Mumbai
Inter-Bank
Offer
Rate),
thus
leaving
behind
a
gap
of
nearly
200
basis
points,
which
in
simple
terms
means
a
difference
of
1%-4%
of
arbitrage," points
out
Khanna.
However,
Exim
Bank's
ED
Rao,
has
a
different
story:
"We
are
in
a
position
to
provide
US
dollars
which
is
LIBOR-linked
because
these
films
earn
foreign
exchange
and
therefore,
they
are
well-placed
to
repay
us
in
foreign
currency."
Experts
say
it
is
surprising
that
banks
are
taking
the
road
to
caution
because
there
is
little
risk
involved
for
bankers
in
going
for
film
financing
as
distributors
and
producers
take
the
entire
risk
for
a
film.
Another
important
thing
to
note,
claim
experts,
is
that
the
bankers
get
their
money
back
even
before
the
release
of
a
film.
"But
what
worries
the
banks
is
whether
the
film
will
reach
the
silver
screen
in
the
first
place
as
many
films
never
see
the
light
of
day,"
points
out
Gairola.
Once
a
film
hits
the
screen,
there
is
little
cause
for
anxiety.
Reliance
Entertainment
chairman
Amit
Khanna
explains
that
there
are
so
many
ways
of
making
money
after
a
film
is
released
including
merchandising,
that
a
lot
of
risk
is
mitigated.
Another
futuristic
trend
is
that
the
concept
of
film
insurance
has
also
taken
root
with
Subhash
Ghai's
film
Taal.
Insurance
agencies
like
New
India
Assurance,
United
India
Insurance
Co.
and
others
are
in
the
fray.
Only,
that
insurance
has
nothing
to
do
with
the
performance
of
a
film
as
it
covers
only
the
loss
incurred
by
a
producer
in
case
lead
characters
stay
away
from
shooting
or
if
there's
an
accident.
There's
clearly
a
long
way
before
Indian
banks
can
get
into
the
producer's
seat
with
confidence
but
a
beginning
definitely
has
been
made
in
corporatised
film-funding.