Kishan Vikas Patra (KVP) is a saving certificate scheme which was introduced back in 1988 for the first time. It was launched by the Indian Postal department and backed by the central government. It was very successful in the initial years but later the issues of misuse of Kishan Vikas Patra surfaced. Then, the Government set up a committee under the chairmanship of former Deputy governor of RBI Smt. Shyamala Gopinath which recommended the discontinuation of Kishan Vikas Patra because there was a possibility of using them for money laundering. Then, finally, the government discontinued Kishan Vikas Patra in 2011.
However, after a change in government at the centre in 2014, Kishan Vikas Patra was re-introduced with some additional features. Initially, it was meant for farmers to enable them to save for long-term, and hence its name was Kishan Vikas Patra. Now it is available for all. To prevent the possibilities of money laundering, in 2014 the government made PAN Card proof compulsory for investments above Rs. 50,000. To deposit Rs. 10 lakhs and above, you must submit income proofs (salary slips, bank statement, ITR document etc.). It is a low-risk savings platform, where you can safely park your money for a certain period.
Most important points about Kishan Vikas Patra
- An adult in his own name or on behalf of a minor, a trust, as well as two adults jointly can invest in Kishan Vikas Patra.
- The amount invested in Kishan Vikas Patra doubles in 112 months.
- The government offers an interest rate of 7.7 % (Oct-Dec 2018 quarter) on Kishan Vikas Patra (KVP) which is compounded annually.
- It doesn’t come under the 80-C deductions and the returns are completely taxable.
- The lock-in period is under KVP is 30 months, i.e. if the amount is invested once it cannot be withdrawn before 30 months.
- When the KVP certificate is prematurely enchased (after 30 months and before 112 months), you will receive the entire principal amount plus Kishan Vikas Patra interest rate which will be less than the full rate that you would normally have been given.
- Denominations of Rs. 50,000 KVP is available only at the head post office of a city.
- KVP certificate can be used as collateral or security to avail secured loans. The interest rate is comparatively lesser for such loans.
- It is also available at designed branches of commercial banks.
- KVP certificates are transferable from person to person, from one post office to another one, anywhere in India.
- The Non-Resident Indians are not eligible to purchase Kisan Vikas Patra as there is no such provision in the rules.
- Minimum investment amount is Rs. 1,000 and in multiples of Rs. 1,000 thereof. While there is no maximum investment limit.
Read about Kishan Credit Card at KCC