Industry spokespersons point out that providing bank finance only at the production stage without funding the two crucial marketing stages will end up defeating the very purpose as this would restrict the commercial viability of a film.

Ever since bank funding of films came into the reckoning after information and broadcasting minister Sushma Swaraj announced earlier this year that an "industry status" would be conferred on the sector, banks have been showing interest in considering the possibility of funding films -- even before an official notification has been issued.

However, there areriders, considering the risks associated with funding projects in this unorganised sector. The general perception in banks is that production carries less of credit risk. This is because the producer has the backing of a comprehensive Copyright Act, which is not the case with either distributors or exhibitors.

After the amendment of the Indian Copyright in 1994, the producer of a film becomes its ``author,'' which is actually the term used to denote the copyright owner of the film. This gives a film producer the privilege of increased revenue from intellectual property rights the act confers on him at a time when satellite channels and cable networks are proliferating.

According to FFI secretary Supran Sen, the preliminary discussions at the first meeting on July 25 this year helped clear many apprehensions about the industry in the minds of bankers, most of whom have now come around to the view that funding proposals of films could definitely be thought of once concrete risk management measures arediscussed at the second meeting.

An additional comfort factor (apart from the amended Copyright Act) in the production stage is an existing practice of providing security even to private financiers in the form of a laboratory letter, which testifies that the prints of the films cannot leave the laboratory without the consent of financiers, making this form of lending somewhat similar to collateral-based lending.

There is a general optimism about bank funding of non-traditional industries, now that banks are already looking beyond conventional collateral-based lending to sectors such as infrastructure and software. As of today, financing of films is done almost exclusively through private financiers, who charge 24-30 per cent on loans.

An important factor that will decide how much of bank finance eventually comes to the industry will be the willingness of insurance companies to grant cover to films through all the three stages -- production, distribution and exhibition.

A section of the bankingindustry wants senior officials of General Insurance Corporation (GIC) and its four subsidiaries be called for the October meeting to study such possibilities.

Film industry insiders feel bank finance should be made available to the exhibition sector either at a time when an exhibitor has to pay large amounts to distributors for acquiring rights to screen a film or to help increase seating capacities in cinema houses.

As far as distribution is concerned, the suggestion is that bankers could initially begin by financing a distributor who had already acquired the distribution rights of a film for a particular territory and at a stage when the film had already been certified, since this stage held no risk as far as completing the film was concerned. This is a stage when distributors have to pay large amounts to producers for which they had either to fall back on private financiers or compromise on terms and conditions with exhibitors.

Industry spokesmen are likely to urge banks not to replicate theNational Film Development Corporation (NDFC) fiasco caused by NDFC's insistence on funding only non-commercial films and its skewed funding of such films only at the production stage while ignoring the marketing stages totally.