Tk 1,000cr fund for cinemas, but not many takers

More than two years back, Bangladesh Bank formed a low-cost fund amounting to Tk 1,000 crore for setting up new cinemas and renovating existing ones. However, only Tk 18 crore has been disbursed through two banks till date.

Complexities involving deeds offered as mortgage, lengthy procedures for availing the loans, lack of collateral, and growing demand for Netflix and other video streaming platforms are the major reasons for poor demand, according to industry insiders.

In February 2021, Bangladesh Bank had asked cinema owners to apply for the loans within March that year. It later extended the deadline twice, the latest being till December this year, because of poor demand.

Under the refinance scheme, entrepreneurs can each get Tk 10 crore to set up new cinemas whereas the owners of existing ones can each avail Tk 5 crore to renovate their facilities.

The interest rate for end-users is 5 percent in metropolitan areas and 4.5 percent for those located outside. In contrast, the interest rate for other loans now stands at nearly 12 percent.

Banks participating in the scheme need to pay an interest of 1.5 per cent to Bangladesh Bank.

Six banks signed deals with the central bank to disburse loans from the scheme -- Premier Bank PLC, ONE Bank PLC, Trust Bank, Agrani Bank PLC, Sonali Bank PLC and Southeast Bank PLC.

Of them, only Premier Bank took Tk 15 crore while ONE Bank Tk 3 crore, central bank data shows.

As per the data, Premier Bank provided a majority of its fund for Show Motion Limited, which runs cineplexes under the Star Cineplex brand.

There is little demand for a central bank fund for the development of cinemas, which industry insiders reason for complexities involving deeds offered as mortgage, procedures for availing the loans being lengthy, a lack of collateral and growing demand for Netflix and other video streaming platforms. The photo was taken at Khulna city last Thursday. Photo: Habibur Rahman

Opening its first cineplex at the Bashundhara City Shopping Mall in 2002 with an investment of Tk 5 crore, Show Motion now has four cineplexes in Dhaka.

Mahaboob Rahman Ruhel, chairman of Show Motion, recently told The Daily Star that they had to put in a lot of effort to get loans from the scheme, which were being used to set up new cineplexes in Dhaka, Bogura and Narayanganj.

"The lenders are uninterested while the process is quite lengthy," he said, adding that their business started with an investment of Tk 5 crore but it has now increased to Tk 90 crore.

Central bank data shows that ONE Bank was to provide its fund to the Grand Riverview Hotel to set up a new cineplex in Rajshahi city.

Md Monzur Mofiz, managing director of the bank, said the cineplex is under construction but the loan is yet to be disbursed.

There is low demand because people are now enjoying movies at their own convenient time and place on video streaming platforms like Netflix, he added.

It all boils down to the loan repayment ability of cinema owners, said Mia Alauddin, senior vice-president of the Bangladesh Film Exhibitors Association.

Many cinema owners did not apply for the loan as it is difficult to comply with the conditions imposed by banks and there are complexities over the land on which many cinemas are situated.

These are also the reasons why around 50 cinema owners applied for the loan but did not get it, he added.

Alauddin, alongside Iftekhar Uddin Noushad, owner of Madhumita Cinema Hall, one of Dhaka's oldest cinemas, gave another excuse – that not enough content is available in the country.

"We can screen films for 15 weeks to 20 weeks. The rest of the time the theaters are closed," Noushad said.

There were as many as 1,235 cinemas in Bangladesh in 1998 but currently, only about 60 are in operation. During the Eid festivals, the number doubles to around 120, according to the association.