What Is Kisan Vikas Patra and Top 10 Things to Know About

1. WHAT IS KISAN VIKAS PATRA?

Kisan Vikas Patra (KVP) is a savings certificate scheme open for all residents and trusts of India. It offers to double the one-time deposits with an investment tenure of 124 months at a rate of 6.9% p.a.

As the name indicates, this scheme was mainly launched for the farmers in 1988. But now since 2014, anybody can invest in KVP if they fulfil the eligibility standards. The main purpose behind it is to encourage the habit of long-term investments in the citizens.

2. TYPES OF KVP CERTIFICATES

Kisan Vikas Patra scheme offers 3 types of accounts to choose from:-

  1. Single Holder Type: In this type, the certificate is allotted in the name of a single individual.
  2. Joint A Type: In this type, the certificate is issued jointly in the name of two individuals. At the time of maturity, both are entitled to receive the pay-out.
  3. Joint B Type: In this type too, the certificate can be held jointly by two individuals. However, at the time of maturity, only one of the two account holders receives the pay-out, unlike Joint Type A.

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3. ELIGIBILITY FOR KVP

  • The applicant must be over the age of 18 and a resident of India.
  • A minor is not eligible to apply directly for a KVP. However, an adult can purchase the certificate on behalf of the minor.
  • NRIs (Non-Resident Indian), HUFs (Hindu Undivided Family) and co-operatives are not eligible to avail of the scheme.

4. INTEREST RATES

The interest rates are decided by the Ministry of Finance that change periodically and remain fixed for a quarter. For the third quarter (October to December) of the financial year 2020-21, it is fixed at 6.9% for a tenure of 124 months.

5. BENEFITS OF KVP

  • Affordability: Individuals can purchase a KVP certificate by investing as little as ₹ 1,000 and its multiples thereof. While there is no maximum limit for investing.
  • Assured returns: It is safe to park one’s funds into this scheme as it promises to return double the amount deposited after a certain period.
  • Loan facility: A holder of a KVP certificate is eligible to avail of a loan at low interest rates while keeping their certificate as collateral.

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6. APPLICATION PROCEDURE

  • First requirement is an application form that can be obtained from any post office or an eligible bank. Though there is no provision to apply for the scheme online, the application form can be downloaded online.
  • Secondly, a duly filled form has to be submitted along with an ID and address proof copy at the post office or one of the banks offering the scheme.
  • Once the verification of documents is completed, the payment can be made by the medium of cash, cheque or demand draft.
  • However, it is mandatory to furnish a PAN card if the amount invested exceeds ₹ 50,000 and additionally, income proofs too if the amount exceeds ₹ 10 lakhs.

7. NOMINATION

Certificate holder(s) can easily make a nomination so that the nominee can receive the amount at the time of maturity in case of demise of the holder(s). The application form can be submitted to the postmaster or bank officer either at the time of purchase or any time thereafter.

8. WITHDRAWAL PROCEDURE

WITHDRAWAL

INTEREST

PENALTY

Before 1 year

No interest

Yes

From 1 year up to 2.5 years

Low interest rate

No

For 2.5 years (before maturity)

Pre decided interest rate

No

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9. TRANSFERABILITY OF KVP

A Kisan Vikas Patra (KVP) certificate is transferable from one person to another in the following cases:

  • From a deceased holder to their legal heir
  • From the holder to any person as ordered by the court of law
  • From joint holders to one of the current holders
  • From a single holder to joint holders including the transferee

10. ENCASHMENT

KVP can be encashed by the holder at the post office or the bank where it was issued. In case it is not encashed for more than one month of the maturity, the holder is entitled to the interest at the rate applicable. However, no interest is applicable if the amount is credited to the holder’s savings account.

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