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Kisan Vikas Patra (KVP) is a certificate scheme launched by the Indian government in 1988. It doubles a one-time investment in a period of 115 months. If you deposit Rs 5,000, you will get Rs 10,000 post-maturity.
The minimum investment amount is Rs 1,000 and there is no upper limit. If you invest a lump sum amount today, you can get double the amount at the end of the 115th month. The scheme was launched to enable farmers to save for the long term but now it is available for all. KVP certificates can be purchased from select public sector banks and post offices.
Eligibility criteria for Kisan Vikas Patra scheme
Must be an Indian citizen.
Age: Adults (18 years or above).
Minor: A guardian can purchase KVP certificates on behalf of minors or those of unsound mind.
Trusts are eligible for KVP
Restrictions: Hindu undivided families (HUFs) and non-resident Indians (NRIs) cannot invest in KVP.
Kisan Vikas Patra: Features and Benefits
Guaranteed returns: Regardless of market fluctuations, KVP assures a guaranteed sum.
Compounded interest: The interest rate for KVP varies depending on the year of investment. As of the Q1 FY25, the interest rate is 7.5 per cent. Interest is compounded yearly, leading to higher returns over time.
Fixed time horizon: KVP has a fixed maturity period of 115 months. Upon maturity, investors receive the corpus along with accrued interest. The maturity proceeds of KVP will continue to accrue interest till you withdraw the amount.
Flexible investment amount: Investors can start with as little as Rs 1,000 and invest any amount thereafter, as long as it's a multiple of Rs 1,000. Larger investments exceeding Rs 50,000 require PAN details.
Tax benefits: Withdrawals post-maturity are exempt from Tax Deducted at Source (TDS). However, KVP does not offer tax deductions under Section 80C of the Income Tax Act.
Nomination facility: Investors can nominate beneficiaries by filling out a form. Minors can also be nominated.
Loan facility: Investors can avail of loans against their KVP certificates. The certificate serves as collateral for a secured loan, often at lower interest rates compared to unsecured loans.
Rules to premature withdrawal
Though the account matures after 115 months, the lock-in period is 30 months (2 years and six months). One cannot encash from the scheme early unless and until due to the account holder’s demise or a court order.
To invest in Kisan Vikas Patra (KVP) and complete the necessary documentation, follow these steps:
Obtain and fill application form: Collect Form A and fill in all the required information accurately.
Submission of application: Submit the filled application form at the nearest post office or authorised bank branch.
Additional form for Agents (if applicable): If the investment in KVP is through an agent, then the agent also needs to submit Form A1.
Complete KYC Process: As per regulations, the Know Your Customer process is mandatory.
Make the deposit: After your documents are verified, proceed to make the deposit. Payment methods include cash, locally executed cheque, pay order, or demand draft.
Issuance of KVP Certificate: The user will get the KVP certificate immediately except if the payment is made through cheque, pay order, or demand draft.
Ensure to keep the certificate safe as it will be required for maturity proceedings.
