23rd March, 2018

Frequently asked questions about Kisan Vikas Patra

Kisan Vikas Patra (KVP) Scheme Frequently Asked Questions

1) What is Kisan Vikas Patra (KVP)? When was it launched?

Kisan Vikas Patra (KVP) is a small savings scheme launched by the India Post. It is mainly targeted at sections of society and farmers who have limited means or access to financial investment options or those looking beyond National Savings Certificate (NSC) and Public Provident Fund (PPF). It was first launched in 1988 and was discontinued in 2011 by the previous government to prevent misuse of the scheme for purposes like money laundering. It was then reintroduced in 2014 by the current government to utilize the generated revenue for various schemes entitled for the farmers.

2) Who is eligible to invest in the scheme?

The KVP scheme can be purchased by an Indian adult in his/her own name, or on behalf of a minor; a trust; and two adults jointly.

3) What type of certificates is issued under the KVP scheme?

The certificates shall be of the following types:

  • Single Holder Type Certificate: It can be issued to an adult for himself/herself or on behalf of a minor.
  • Joint ‘A’ Type Certificate: It may be issued jointly to two adults payable to both holders jointly or to the survivor.
  • Joint ‘B’ Type Certificate: It may be issued jointly to two adults payable to either of the holders jointly or to the survivor.

4) What is the rate of interest and the encashment amount during maturity under KVP?

The KVP interest rate currently is 7.6% which is subject to periodic revision by the government. The principal amount invested will be doubled in a period of 9 years and 5 months (maturity period). For instance, the amount payable on encashment of certificate during maturity is Rs. 2000 for denomination of Rs. 1000, and similarly at proportionate rates for other denominations.

5) What is the minimum lock-in period? Is there an option for premature encashment?

KVP certificates have a lock-in period of 2 ½ years. Thereafter, investors can redeem in every six months interval. However, a certificate may be prematurely en-cashed any time in any of the following circumstances:

  • on the death of the holder of any of the holders in case of joint holders;
  • on forfeiture by a pledge being Gazetted Government Officer;
  • when ordered by a court of law.

6) Where can you purchase the KVP certificate scheme?

KVP certificates can be purchased from any departmental post office and designated bank branches, by filling up the application form and depositing money in cash, or by cheque or demand drafts. Banks will then issue a KVP certificate along with an identity slip for future reference.

7) What is the maximum amount and minimum amount a KVP holder can deposit under the scheme?

The scheme is available for a minimum deposit of Rs. 1,000 and no maximum limit. It is available in denominations of Rs. 1,000, Rs. 5,000, Rs. 10,000 and Rs. 50,000.

8) What should be done in case a KVP account holder loses his/her KVP certificate?

If a KVP certificate is lost, stolen, destroyed, mutilated or defaced, the KVP holder can write to the post office of issue requesting for a duplicate certificate. One needs to attach the identity slip that was given at the time of certificate issue which proves ownership of KVP.

9) What is the facility of KVP certificate transfer provided by the scheme?

The KVP certificate issued to the beneficiary can be transferred from one person to another and from one post office (or bank) to another. People can utilize the facility in case of emergency or according to any other need. In order to transfer the certificate, the holder will have to submit a handwritten consent to the officer at the post office or bank. The transferee must be a resident Indian and eligible to purchase the KVP certificate. One needs to provide ID and address proof to avail the same.

10) Where can one encash the amount payable under the KVP scheme?

A certificate can be en-cashed at the post-office or the bank where it was issued. It can also be en-cashed at another post-office or bank provided the issuing authority is satisfied with the verification of the identity and other details of the KVP holder.

11) What are some of the benefits of the KVP scheme?

Some of the benefits for investing in the KVP scheme are as follows:

  • KVP scheme offers a good opportunity for investing in small savings for people from low and middle income groups.
  • Since it is a government scheme, the small investor can be assured of the returns on invested amount which will be doubled on maturity.
  • People who are looking for risk free investments will benefit from the scheme.
  • The process of investing in the scheme is easy and simple.
  • KVP certificate can be pledged as security to avail loans from banks.
  • There is no cap on the amount as well as the number of certificates one can purchase under the scheme.
  • The deposits are exempt from tax deduction at source (TDS) at the time of withdrawal.

12) What are the documents required to purchase a KVP certificate(s)?

Individuals will have to conform to KYC norms and furnish an identification proof (Passport, Pan Card, Driving Licence, Voter ID Card, etc.) and an address proof (Telephone bill, Electricity bill, Bank or PO statement, Ration Card, etc.). For investments over Rs. 50,000 PAN Card proof is mandatory. For investments exceeding Rs. 10 lakh, a proof for income source is compulsory. [irp]