Hopes regional movies will shiftbase to Kerala to get benefits
The Kerala Financial Corporation (KFC), which recently stepped in to finance film production through two industry-specific loan schemes, aims at showcasing the State as a centre of excellence in filmmaking.
KFC chairman and managing director Yogesh Gupta is upbeat about the KFC’s entry into the tinsel world at a time when, he feels, the State is fast becoming a favourite shooting location with film-makers, thanks to its exotic scenic beauty and wildlife.
“We can expect Bollywood and other regional movies to shift base to Kerala to take advantage of our schemes. It (the loan schemes) will reduce the industry’s dependence on private financiers who charge exorbitant interest rates. The KFC hopes for a rush of projects under these sectors, which will boost the entertainment sector in Kerala,” he told The Hindu .
The KFC rolled out two industry-specific loans recently – one for the production of films and tele-serials and the other for creating infrastructure through construction of multiplex cinema houses and renovation of old movie houses.
Mr. Gupta said the success of one product would automatically encourage investment in the second product. Construction of cinema complexes and modernisation and upgrade of cinema theatres would lead to a cycle of development with both the loan products feeding each other.
The KFC turned its attention to the entertainment industry gauging the visible signs of decline in the State’s tourism sector owing to global economic recession and stiff competition from neighbouring States.
Mr. Gupta felt that apart from tourism, the State had a strong standing in the entertainment industry as the numerous national awards won by Malayalam films and its technicians indicated.
“We have not been able to utilise fully the talent pool and nurture the creative abilities available in the State owing to lack of funds and support to this sector,” he said.
Banks have traditionally declined to finance film production owing to the risk factor on account of lack of any tangible primary security. To overcome this issue, the KFC has opted for modern financing tools to securitise loans rather than simply rely on physical assets-based financing.
The focus is on future income which can be amortised and converted into assets for the security. In fact, in modern days, most of the films create various rights and patents that are sold even before the release of the movie and amortising them offers better security, more liquidity, and easy execution when compared with the physical tangible assets, he said.
Of the security of 150 per cent to cover the total loan sanctioned for producing a film, the KFC has fixed a ceiling of 50 per cent on account of mortgage of various rights. Under the scheme, 50 per cent of the production cost or Rs.200 lakh will be granted as loan at an interest rate of 14.5 per cent.
It should be repaid within a maximum period of 18 months, including a gestation period of six months.
For the construction and renovation of theatres, the KFC will grant up to 65 per cent of the project cost or Rs.2,000 lakh subjected to security cover of 1.75 times of the actual loan.
Repayment period is five years, with a gestation period of one year.