Kisan Vikas Patra (KVP) is a savings scheme available at India Post Offices in the form of certificates. It is fixed rate small savings scheme that focuses on doubling your investment after a predetermined period of time (118 months in the currently available issue). The popularity of this scheme is linked to its risk free nature due to Government of India guarantee. As per current rules, KVP certificates can be purchased from select public sector banks as well as from India Post Offices.
The rate of interest applicable to Kisan Vikas Patra (KVP) may change periodically based on announcements made by the Finance Ministry. The current interest rate applicable to KVP is 7.3% per annum which will double your investment in 118 months. The following are the historical interest rates offered by the Kisan Vikas Patra scheme* :
Interest Rate of KVP
|Q1 FY 2018-19||7.3%(maturity in 118 months)|
|Q2 FY 2018-19||7.3%(maturity in 118 months)|
|Q3 FY 2017-18||7.0%(maturity in 112 months)|
|Q4 FY 2017-18||7.0%(maturity in 112 months)|
*KVP principal is compounded annually.
The following is the eligibility criteria for investing in the KVP scheme:
- The applicant has to be an adult resident of India.
- A parent/guardian may invest on behalf of a minor.
- Hindu Undivided Families (HUFs) and Non-Resident Indian (NRIs) cannot invest in Kisan Vikas Patra.
KVP is a fixed return scheme backed by the government that offers guaranteed returns. The following are some key features of the scheme :
- Certificates are currently available in denominations of Rs. 1,000, Rs, 5,000, Rs. 10,000, and Rs. 50,000.
- Currently there is no maximum limit on KVP investments.
- Certificates are available at all India Post Offices and KVP Application forms are available online as well as at India Post Offices and select banks.
- Premature encashment allowed after two and half years subject to terms and conditions.
- The maturity period may change based on rate changes made by the Ministry of Finance. However, the maturity value is pre-printed on the certificate issued.
- Kisan Vikas Patra can be easily transferred from one post office to another as well as from one person to another.
Benefits of Kisan Vikas Patra
KVP is not designed to attract investors looking to save tax. The principal amount and interest do not have any tax deductions. However it still offers a few key benefits to investors. Some of those benefits are explained here :
- Guaranteed returns as KVP certificate is a government-backed instrument.
- Long-term wealth creation as a Kisan Vikas Patra allows you to stay invested for close to 10 years and doubles your money.
- Flexible investment instrument as there is no upper cap on KVP.
- Kisan Vikas Patra can be used as collateral for securing loans at preferred rates from banks.
- Transferable from one person to another as well as from one post office to another.
Premature Encashment of Kisan Vikas Patra
Investors are allowed to withdraw their funds at any given point of time under the scheme but there are certain limitations to it :
- Premature withdrawals made within a period of 1 year will not receive any interest. The investor will also have to pay a penalty as per scheme regulations.
- Premature withdrawals made after a period of 1 year and up to 2.5 years will receive interest but at a reduced rate.
- Premature withdrawal after a period of 2.5 years will not attract any penalties and will also receive interest at the applicable rate.
Frequently Asked Questions (FAQs)
1) Can the Post Office issue a Duplicate Kisan Vikas Patra ?
In the event of a lost, mutilated, defaced, or stolen KVP certificate, the buyer can apply for a duplicate KVP certificate. To do this, the investor has to provide the identity slip provided to him/her at the time of issue of the original certificate.
2) Can Kisan Vikas Patra be Encashed Only at the Issuer Post Office?
KVP certificates can be easily encashed at the issuer post office. In case of an emergency, the buyer can encash it through other post offices as well. However, the buyer has to produce the identity slip along with the KVP certificate at the time of encashment.
3) Are Co-operative Banks/Co-operative Societies Permitted to Invest in Kisan Vikas Patra?
According to rule 6 of Kisan Vikas Patra, co-operative banks and co-operative societies are not permitted to invest in this scheme.
4) Can Kisan Vikas Patra be Purchased by Non-Resident Indians?
NRIs are not eligible to purchase KVP certificates.
5) Can Kisan Vikas Patra be Purchased by the ‘Karta’ on behalf of a Hindu Undivided Family (HUF)?
There is no provision in the rules for purchase of a Kisan Vikas Patra by the ‘Karta’ on behalf of an HUF.