Kisan Vikas Patra: Is it a lucrative investment option? Are you prepared to answer a question on Kisan Vikas Patra?
‘Kisan Vikas Patra’, is a topic that features in the GK section of various Bank/SSC and other entrance exams. Hence, we thought of sharing some valuable insights into KVP scheme.
After reading the name ‘Kisan Vikas Patra’, you must wondering if it is exclusively launched for farmers? In layman terms, ‘Kisan Vikas Patra’ would refer to a scheme or a certificate for upliftment of farmer and rural community.
Kisan Vikas Patra is considered to be a safe investment scheme not only for farmer community but for every individual across the country. It aims to encourage investment among poor, rural and tribal families without access to banking and finance channels.
Background of Kisan Vikas Patra
Kisan Vikas Patra was first launched by the Government of India on April 1, 1988. A committee led by former Deputy Governor of RBI, Shyamala Gopinath recommended that KVP should be discontinued to avoid money laundering/black money. Hence, it was discontinued in 2011. To provide more investment schemes among citizens, Finance Minister Arun Jaitley re-launched the Kisan Vikas Patra (KVP) scheme on Nov 18, 2014.
Salient features of Kisan Vikas Patra
- At present, Kisan Vikas Patra is sold through Post Offices across the country. Any citizen of India can purchase the KVP by filling a form and depositing the desired amount through cash or cheque.
- Annual rate of interest is 7%
- ‘Kisan Vikas Patra’ guarantees to double your invested money in 100 months (8 years and 4 months).
- KVP are available in denominations of Rs.1000, Rs. 5000, Rs. 10,000, and Rs. 50,000. There is no upper ceiling on investment.
- Minimum lock-in period: 2 years and 6 months
- After 2.5 years, KVP can be encashed.
- Interest earned on KVP is taxable @ 10% TDS. But there is no tax deduction on the amount received at maturity.
- KVP is transferable from one post office to another, anywhere in India
- Adults can buy KVP on behalf of minors. No ID proof and residence proof is required.
- Nomination is allowed on KVP
KVP 1988 vs KVP 2014: Comparison
|Old scheme (1988)||New scheme (2014)|
|Denominations: Rs. 100, 500, 1000, 5000 and 10,000||Denominations: Rs. 1000, 5000, 10,000 and 50,000|
|Benefit: Money doubled in 8 years and 7 months||Benefit: Money double in 100 month (8 years and 4 months)|
|Interest rate: Annual compound interest rate 8.2%||Interest rate: 8.7% p.a.|
|Anyone could buy and encash it. Hence, Shaymala Gopinath Committee feared money misuse/black money.||For 50K investment: PAN card required, 10 lakh investment: source of income required|
|Status: Discontinued in 2011||Status: Launched in 2014|
How Kisan Vikas Patra helps the lower income group?
Most of the target audience is either ‘Below Poverty Line (BPL)’ or ‘slightly above poverty line’, hence they do not fall under income tax bracket. Moreover, KVP’s are designed for low risk taking individuals looking for a hassle free safe investment option with high returns on their investment.
KVP Vs other investment options
The Kisan Vikas Patra (KVP) is one of the most popular saving schemes in the sub-urban and rural areas.
KVP Vs National Saving Certificate
- KVP has a lock in period of 30 months while that of NSC is 60 or 120 months.
- KVP is transferable to anyone, but this is not the case with NSC. It is transferable only once to a close relative.
KVP Vs Fixed Deposit
- The interest rate of a Fixed Deposit (FD) in a bank for 8 years is similar to that of Kisan Vikas Patra. You might be aware that most of the banks offer 9% rate of interest which is more than 8.7% of KVP.
- FD provides tax saving benefit, while KVP does not. But then the target audience of KVP is rural and farmer community.
KVP Vs Public Provident Fund
Maturity time of PPF is 15 years, but you can withdraw it partially after 7 years. Rate of interest of both KVP and PPF is 8.7%.
- PPF offers tax saving benefit, whereas KVP return is taxable.
We are sharing with you some previous year questions and probable questions related to Kisan Vikas Patra (KVP).
- Amount invested in Kisan Vikas Patra would get doubled in?
- What is the upper limit on investment in KVPs? (IBPS RRB PO 2015) (NICL Assistant 2015) (RBI Assistant 2015)
- Kisan Vikas Patra savings scheme was originally launched in which year?
- What is the maturity period of KVP?
- What is the lock-in period of KVP? (SBI Clerk 2015)
- Is KVP tax-free?
- What is the minimum amount that can be invested under KVP? (SBI Clerk Main 2016) (IBPS Clerk Main 2015)
We hope after going through this article, you will be ready to answer questions pertaining to Kisan Vikas Patra. Stay tuned for updates on various schemes launched by the Government.