Cash boost for Bollywood

Bollywood is alleged to have used Mafia money

By Sanjeev Srivastava in Bombay

Bollywood looks set to increase film production following a decision by the Reserve Bank of India to allow banks to finance movies.

The news has been welcomed by the film industry which has been hard pressed for funds.

"There are private financers also but their rate of industry is very high," said film producer Sunil Thakur.

"The bank is financing at a rate of 16% and that's a good thing.

"But they should not only finance the big producer but the general producer also."

For the last couple of years Mafia killings and gang wars have become a favourite theme with filmmakers who prefer working on subjects closer to real life.

But no Bollywood film producer has been bold enough to make a film on the underworld film industry nexus and the alleged use of Mafia money in financing movies.

Bank finance will now be available with a number of conditions.

Initially bank funds may be given only to established filmmakers with a proven track record.

The banks also want the filmmaker to come up with 25% of the project cost before releasing the first instalment of the loan.

One of India's biggest lending banks - IDBI - has already announced its decision to give loans to two film makers.

"We decided that in the beginning we should finance corporates which are promoted by producers who have an established track record of successful production of feature films," said senior manager Vinay Kumar.

" I believe that once the experience is good, all producers whether big or small will stand to gain."

Cautious

Banks are likely to remain cautious in advancing loans to what is seen as a high risk sector, as 80% of Indian films fail at the box office.

Every year about 700 films are made in India and the cost of an average song and dance Bollywood extravaganza with popular stars comes to about three to four million dollars.

It is a huge sum by Indian standards and in a business regarded as risky and unpredictable by conventional financial institutions, it is not easy to raise funds.

Like any other government initiative the bureaucracy involved in getting a loan from banks may put off some filmmakers.

But on the whole it is good news for an industry desperately trying to shake off allegations of having links with the Mafia and using underworld money to finance films.