The government on November 18, 2014 re-launched the popular small savings instrument Kisan Vikas Patra (KVP) to encourage people to save more. The collection under the scheme would also help the government to mobilize funds for financing development plans. This scheme doubles the money invested in ten years and four months or total of 124 months. The Directorate of Small Savings Government of India sells these saving bonds through all Post Offices in the country so that the scheme can be accessed by citizens from all over the country. A KVP can be encashed after two and a half years from the date of issue at the value it has been bought and the interest accrued for the period.
Kisan vikash patra is a saving certificate which was first launched in 1988 and it has been working but afterward government of India has set up a committee under supervision of Shayamla Gopinath who has given his recommendation to government that KVP can be misused. Based on committee’s recommendation than government of India decided to close this scheme and KVP was closed in 2011 but new government at center decided to re-launch the scheme in 2014.
The “kisan” in Kisan Vikas Patra does not mean that only farmers can buy these saving certificates. It means that the revenue mobilized by this scheme will be used by the Government of India in welfare schemes for farmers. Any individual can safely invest and save their money in the form of Kisan Vikas Patra.
You can invest in Kisan Vikas Patra if you are a citizen of India and an adult; in your own name, or on behalf of a minor. A trust is also eligible to invest in KVP. Two adults can jointly buy KVP. Kisan Vikas Patra is not for business entities such as a company or institutions. NRIs or HUF (Hindu Undivided Family) are also not eligible to invest in KVP.
KVP certificates are available in the denominations of Rs 1000 and in multiples of Rs.1,000/- thereof. The minimum amount that can be invested is Rs 1000 however there is no upper limit on purchase of KVPs.
Kisan Vikas Patra does not offer any income tax benefit to the investor however withdrawals are exempted from Tax Deduction at Source (TDS) upon maturity.
The amount of KVP can be withdrawn after 124 months (10 years and four months).The lock-in period of a KVP is 2 years 6 months(30 months). Premature encashment of the KVP certificate is not permissible. The certificates can only be encashed in event of the death of the holder or forfeiture by a pledge or on the order of the courts. The current interest Rate on KVP is 6.9% compounded annually