Money does matter!

SO the IDBI recognition that the film industry got seems to be going the IBA way, too. A month after showbiz was approved as an industrial concern under the Industrial Development Bank of India Act, 1964, nothing has changed, never mind the spontaneous applause that information and broadcasting minister, Sushma Swaraj generated, following the announcement.

Will our merchants of rainbow-coloured dreams really profit from the IDBI announcement at all? Well, not as things stand. For one thing, the kind of money that today’s films demand may not be easy to come by. And for another, the industry still figures in the unorganised sector and has made no effort whatsoever to adhere to the banks’ stipulations -- such as corporate structure, fully-audited accounts, tightly-bound scripts and shoot schedules.
The problem for the banks in assessing a loan application from the industry has been the huge risk factors involved. Senior bankers claim they’re clueless on how to rate a project, say a film. What do they really focus on? The star cast or the filmmaker profile? Living as we do, at a time when the stars do not really command much of an initial at the box-office, the first option is quickly discarded. And as for the second, the filmmakers’ fortunes at the turnstiles have see-sawed so often in recent times that there is no guarantee a good director will always ensure a commercially-successful film.

In any case, analysing a work of art is always fraught with too many risks. Bankers have had a tough time assessing the marketability of even consumer goods. And judging the intrinsic worth or box-office potential of a film isn’t what they’ve been accustomed to doing. If the best of producers have had a tough time deciding the marketability of films, what chance, then, do the bankers stand?

The major bottleneck to bank financing for the film industry seems to be the production schedule the banks demand in advance. In an industry where the scripts are still written on the sets and the stories are rewritten to suit the tastes of the artistes, demanding a detailed schedule or script in advance is akin to asking for the moon.

THE IBA HOGWASH
TWO years ago, the Indian Banks Association (IBA), the premier bankers’ body in the country, had set up a committee of high-profile bankers to list the risk factors and chart out the modalities of granting credit to filmdom. The IBA committee, headed by the former Bank of Baroda chairman, K Kannan, suggested that the insurance sector should show the way in coming up with insurance cover for things like delay in arrival of stars and equipment and accident cover. Surely, we didn’t need the IBA to tell us that?

The import duty is still the single largest contributing factor to the huge production costs involved in each film, the star fees being another. The IBA suggested that the centre should do away with the import duty altogether or at least offer concessions on the same. The industry has been crying itself hoarse making just such a request for years. The plea, of course, has constantly fallen on deaf ears.

The IBA stipulations on filmdom were clear-cut and unambiguous. And entirely expected, one might add. The loan-seeking party should be an established corporate, with a ready script and credible team of technicians and distributors. The security that the loan-seekers could pledge included the film reels, music rights or even the distribution rights. The industry has drawn a blank on both fronts. Corporatisation is still a distant, almost unattainable dream for much of filmdom. What’s more, the menace of piracy of film and music still cuts into the industry’s profits, while the entertainment tax structure that varies from state to state, makes the accounting process of the distribution sector particularly cumbersome. That’s why pledging of intellectual property or distribution rights is really no option. Since loans are not backed by a tangible asset, chances of a recovery, in case of default are next to nil.

Sadly, producers who come under the banks’ most eligible list of loan applicants are those who’re least interested in bank funding. And the ones that are, still figure in their black list. Untouchables in the banks’ reckoning, they have no choice but to look elsewhere for funds, often at huge interest. It’s this set of producers who ought to be brought under the umbrella of bank funds. And fast.


Shaju George Alex