The Kisan Vikas Patra is a revolutionary step towards financial inclusivity. In a country where education is still a distant dream for many, this scheme promises long-term growth prospects to those in need.
The Kisan Vikas Patra (KVP) is a saving certificate scheme that had its inception in 1998. Despite a successful implementation, public support turned rapidly against its favour when a committee under the supervision of Shyamala Gopinath suggested possible cases of misuse. In 2014, it made a return as a guaranteed fixed-return scheme, targeting individuals without proper access to banking facilities.
Regardless of market fluctuations, this fixed-rate small savings scheme aims to double the invested amount at the end of the maturity period.
Additional Reading: Kisan Vikas Patra’s facelift – Is it for you?
Who Can Invest In KVP?
Indian citizens who conform to the following criteria can purchase this saving certificate from India Post offices and public sector banks:
- An adult, either by himself/herself or on the behalf of a minor
- A Trust
- Two adults as joint owners
Investment Limits
The minimum permissible deposit limit is Rs 1000 and in multiples of Rs 1000 thereof. The upper limit is not fixed and therefore, investors can invest any amount that they deem fit.
Risks Involved
Kisan Vikas Patra is a special scheme owned by the Government of India and therefore, the risks are minimal and the returns guaranteed.
Rate Of Interest
This scheme provides a fixed rate of interest in order to ensure the principal amount invested is doubled within a time span of 100 months (subject to change).
Loan Facilities
The certificate issued by Kisan Vikas Patra can be used as collateral for loans. The loan can be availed for personal or business requirements. However, the loan has to be repaid within the investment period.
Additional Reading: Punjab Gramin Bank – Scheme for Financing under PGB Krishi Card (Kisan Credit Card)
Tax Benefits
This scheme is fully exempted from TDS and Wealth Tax. However, the certificate holder is required to pay taxes on the interest earned.
Lock-In Period
The Kisan Vikas Patra comes with a fixed lock-in period of 2 years and 6 months, which means, the certificate holder cannot withdraw the invested amount before the lock-in period is over.
Maturity Amount
The maturity amount is printed on the KVP certificate and it can only be encashed after the investment period is over.
Is KVP A Good Investment Option?
While this scheme finds solid backing by the GOI and shares huge popularity among investors, it should not be the primary choice for investors with access to PPF, FD, Mutual Funds, and other investment products. The reason is simple. Since this scheme aims to improve financial inclusivity, the returns are substantially low.
Additional Reading: Investments That Give Tax-Free Income
Inclusive Growth
The purpose behind Kisan Vikas Patra is not to provide massive returns on investment but to encourage the farmers, labourers, and the countless, faceless others to start investing in reliable entities. In a country where a vast majority is under poverty and education still a distant dream, this scheme stands out as a revolutionary effort to uplift the economy and provide long-term growth to those at the grassroots.
Risk-Free Investments
For those averse to taking risks, there are a handful of other options for you to explore. Government bonds, Public Provident Fund, Fixed Deposits, and Debt Mutual Funds are some of the alternatives that you can consider. Since Debt Mutual Funds invest at least 65% of its corpus in debt securities, your investment remains intact while you gain stable returns from it throughout its lifetime.
If you are on the lookout for safe investment options, there is a world of opportunities out there.