Over the last one year, ever since the Covid-19 pandemic struck the nation, we have been hearing that the films have taken direct to digital route, to avoid the interest burden, resulting in a spike in budget. However, the common movie goer has always been confused as to what exactly does one mean by interest burden and how does it function. We at Pinkvilla, tried to simplify this for all our readers. We got in touch with leading financer, Sanjay Bhandari, who brought bank financing to the forefront for Bollywood producers.
When asked to explain the interest factor, Sanjay Bhandari said, “When you borrow money, it’s for limited period and it has to be repaid from release revenue. But when the film is delayed, the loan remains in the system, and the interest keeps incurring on every day bases. Supposed, a loan was taken for six months, but now, it has been twelve months. So, produces sold their movies to OTT, repaid the loan and interest amount and started a new project.”
He further revealed that private players charge interest rate on loan, which is as high as 30% . “But if we go to bank, they lend money in single digits, at max is 11%,” he smiles. Opening up about the repayment cycle, the financer shared, “Repayment cycle is always in sync with release date. In old days, entire loan should have been repaid before Friday of release. But the industry has grown, and now, non-theatrical revenue accounts for 60 to 70% of the income for producers and the revenue from these rights come post the release. So we have convinced the banks to structure deals in a way that part of money is repaid before theatrical and part post the release.”
Watch him clear many more doubts about the behind the scenes of the financial world of Hindi film industry in the video below. Share it, if you like it.
