The additional Rs 11,000 crore is on account of unapplied interest, penal interest and other charges that the banks will have to bear. Rough calculations show cooperatives account for Rs 32,000 crore or 45 per cent of the total loan waiver and relief scheme, commercial banks Rs 26,000 crore (36 per cent) and regional rural banks Rs 13,000 crore (18 per cent). Their additional exposure will be roughly the same proportion.

The additional exposure does not come as a surprise to banks, which had largely anticipated this in February when the loan waiver was announced.

"Public sector banks are owned by the government and will abide by its instruction. However, by passing on some benefits to farmers, there will also be a lot of scope for fresh credit to them," said a senior executive of a large public sector bank.

Nearly 40 million farmers are to benefit from the debt waiver and relief scheme, with small and marginal farmers accounting for over 90 per cent of the total.

Initial reimbursements to lenders will take at least three months because the accounts of each branch need to be audited and claim certificates verified before the lenders are reimbursed.

The ministry is understood to have told the banks to give fresh credit to the extent of waiver before funds are released to them. The government is likely to release Rs 25,000 crore to lenders in 2008-09 and the rest in installments by 2011-12.

Finance Minister P Chidambaram today complimented lenders for implementing the scheme in a record 30 days. "Over 40 million farmers and their families have benefited under the scheme. The confidence of the people has been reinforced that banks are there to serve people," he said inaugurating 101 new branches of State Bank of India here.

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