Kisan Vikas Patra- Eligibility- interest rate- Benefits -2020

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Kisan Vikas Patra

Kisan Vikas Patra a.k.a. KVP is a popular investment choice amongst the conservative investors who invest in small savings schemes. In this article we will go through some of the key features, benefits, Eligibility and much more about Kisan Vikas Patra.

Kisan Vikas Patra

What is Kisan Vikas Patra?

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Launched in 1988 Kisan Vikas Patra is a small savings scheme by Govt of India. During it’s launch the scheme was mainly targeted for farmers to give them financial stability but with time the scheme was opened to general Indian public for investment.

What are the types Of Kisan Vikas Patra Scheme Accounts?

The KVP Scheme accounts are of three types –

  • Single Holder Type Certificate: This kind of certificate is issued to an adult for self or on behalf of a minor or to a minor.
  • Joint ‘A’ Type Certificate: This type of certificate is issued jointly to two adults, payable to both the holders jointly or to the survivor.
  • Joint ‘B’ Type Certificate: This type of certificate is issued jointly to two adults, payable to either of the holders or to the survivor.

What Is The Eligibility Criteria For The Kisan Vikas Patra Scheme?

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.

What are the benefits And Associated Benefits Of Kisan Vikas Patra/KVP Scheme?

The main benefits of Kisan Vikas Patra are :-

  1. Assured returns: Irrespective of market fluctuations, individuals who have put their money into this scheme would generate a guaranteed sum as the scheme is backed by Govt of India.
  2. Compounding interest: The interest rate of the KVP Scheme tends to vary, and such variations depend on the year it an individual had invested in it. The rate of interest for with effective from 01/04/2020  is 6.9%. The interest accrued on the invested sum is compounded yearly, ensuring more returns to individuals.
  3. Maturity time: The time horizon of the KVP scheme is 124 months. After completing the said period, the scheme matures and extends a corpus to a KVP scheme holder. In case, individuals decide to withdraw the proceeds generated later than the maturity period; the amount would accrue interest until it is withdrawn.
  4. Cost of Investment: Individuals can deposit money into this scheme with as little as Rs. 1,000 and invest as much as they want to. However, the amount has to be a multiple of Rs. 1,000 and a sum over Rs. 50,000 would require PAN details and would be extended by a city’s head post office.
  5. Taxation method: An amount that is withdrawn post maturity is exempted from Tax Deducted at Source or TDS. However, KVP scheme is not entitled to any tax deductions mentioned under Section 80C.
  6.  Nomination: Individuals can select a nominee in this scheme. All they would need to do is fill up a nomination form, offer the required details of their choice of nominees and submit it. Also, Individuals can even select a minor as their nominee.
  7. Loan against a certificate: Individuals can avail a loan against their investment in Kisan Vikas Patra scheme. The KVP certificate would act as collateral while applying for a secured loan and individuals would be able to avail a loan at a lower interest rate

What are the documents required to open Kisan Vikas Patra account In 2020?

Eligible individuals can avail the scheme KVP in 2020 by offering the required documents.

Here is a list of documents that are necessary for the same –

  • Form A must be duly submitted to an India Post Office branch or other specific authorized banks.
  • Form A1, if the application is extended through an agent.
  • Age proof (Passport, Aadhaar, PAN, etc.)
  • Address proof (Aadhaar, Passport, electricity bill, telephone bill, ration card, etc.)
  • Photo identification proof (Aadhaar, voter id, PAN, Passport, driving license, etc.)

Where can someone open Kisan Vikas Patra account?

Kisan Vikas Patra account can be opened in Post office or any authorised bank. If you fulfill the eligibility criteria then you can go to the post office or the authorised bank and fill the necessary forms to open the account.

What is the Withdrawal Procedure for Kisan Vikas Patra?

As of April 2020; The Kisan Vikas Patra scheme matures after the maturity period of 124 months. But the there are early maturity options available as below:-

What are the premature options available for Kisan Vikas Patra?

If an individual opts to withdraw their investment sum within a year of purchase, they will not accrue any interest on it. Rather , they would incur a penalty for it.

If an individual opts to withdraw their invested sum after one year, but before 2.5 years of purchase, they would receive a low rate of returns. No additional charges or penalty would be imposed on it.

If individuals decide to withdraw their investment from Kisan Vikas Patra scheme after 2.5 years of availing it, they would receive the promised rate of returns and would not have to pay the penalty on it.

Individuals can encash their KVP certification, provided they go to a post office or a bank branch from where they had purchased it in the first place. If an emergency arises, they can get the certification encashed from any post office or bank branch but only after availing the approval of the post manager or respective bank manager of the said institution.

Are KVP certificates transferrable?

Yes, KVP certificates are transferrable from one post office to another one, anywhere in India, and from one person to another.

In case of the latter, i.e. transfer from one person to another, the following cases are permissible, but a letter in this regard needs to be submitted:

  • Transfer from one owner to joint holders
  • Transfer from joint holders to one of the holders
  • Transfer from name of the deceased to his legal heir
  • From the joint holder/s to the judge of law and also to other individual/s as ordered by the Court of Law

What is the interest rate for kisan vikas patra?

The latest interest rate for kisan vikas patra effective from 01-04-2020 is 6.9%

how to buy kisan vikas patra online?

Unfortunately the kisan vikas patra certificate can not be purchased online. Investors will have to visit post office or the authorised bank to purchase kisan vikas patra certificate.

What is kisan vikas patra maturity period?

As of 01-04-2020; The maturity period for kisan vikas patra is 124 months.

Is it good to invest in Kisan Vikas Patra scheme?

If you are an ultra conservative investor and do not want to take any risk whatsoever for your investments then you can consider investing in KVP for a slightly higher interest rates than FD.

What are some disadvantages of Kisan Vikas Patra?

The main disadvantage of KVP is the maturity period. Its 10 yrs. Although you have an option for early withdrawal but waiting for KVP to mature to get benefit is not suitable for an investor who is looking for good returns on his/her investment.

KVP is also not tax efficient i.e. any gains from KVP will be added to your income for tax calculation.

Is Kisan Vikas Patra better than FD?

If you compare Kisan Vikas Patra with FD then KVP offers higher interest rate than FD but if you looking to invest in KVP for a premature withdrawal then the experience of premature withdrawal in case KVP is not simple. In case of FD, you can withdraw your money at any time.


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