The Industrial Development Bank of India (IDBI) has announced that a scheme to finance commercial films will be available by the end of this month (March 2001).
The offer of financial assistance, not exceeding 50 per cent of a film's budget comes with a number of conditions. According to the details available the borrower should be a corporate entity promoted by reputed producers and backed by established directors and other technicians with an established track record.
The borrower/producer would be required to contribute not less than 30 per cent of the estimated budget. The prevailing interest rate would be charged on the loan. As security on the loan, IDBI would have to be assigned all agreements, intellectual property rights and a trust. A retention account would be maintained for all capital as well as revenue inflows and outflows.
The bank hopes to finance at least a couple of films during the current financial year itself. Initially, the IDBI would fund Hindi films and take up similar schemes for regional language films later. IDBI Chairman S K Chakrabarty told Screen International, "IDBI has drafted the scheme in consultation with leading film personalities, industry associations, professionals and merchant bankers". The scheme has been approved by the Reserve Bank of India, the Information and Broadcasting Ministry and formal approval by the IDBI board of Director would take place at a meeting on March 16.
The Indian Government had asked the IDBI to come up with a scheme following its inclusion on October 16 last year, of films as an "eligible activity" under Section 2C of the IDBI Act.
Amit Khanna, Chairman Reliance Entertainment told Screen International "the availability of institutional funds would result in substantial reduction in film costs besides resulting in sustained exponential growth".