Kisan Vikas Patra (KVP) is a post office saving certificate scheme which was launched in 1988. This saving plan does not have maximum ceiling of investment which makes it a lucrative option for risk-free investors. The saving scheme was scrapped in 2011 based on the recommendation of Shyamala Gopinath committee. However, the scheme was re-launched in 2014 by the Indian Government. 

Many want to invest in Kisan Vikas Patra purely just for the reason that the investment amount gets doubled after 112 months i.e. 9 years and months. However, the duration is subject to change as per the prevailing interest rate in the market. Read on to learn more about Kisan Vikas Patra saving certificate scheme. 

How can i open Kisan Vikas Patra?

This saving certificate scheme can be opened at the post office by submitted the relevant documents. You can also open the scheme through banks that provide this scheme. You cannot open Kisan Vikas Patra online. Though there are forms available online, you need to fill up the form and walk into the nearest branch to open this saving plan. 

Features and Benefits of Kisan Vikas Patra

This saving scheme have unique features that other plans do not have. Following are the general features provided by the scheme:

  • Risk Free Returns: Unlike other saving schemes such as mutual funds, stocks and securities, Kisan Vikas Patra offer you risk-free returns. The investment amount will not get affected at any cost. Though the interest rate may vary based on the revision, the invested amount remains intact.
  • Long-term Saving Plan: This is a long-term saving scheme that has the tenure of up to 9 years and 10 months. The invested amount doubles after 9 years and 4 months. This is an ideal investment plan that can help you get a lump sum for bigger events such as higher education and marriage. 
  • Investment Amount: One can open this saving scheme with the minimum of Rs. 1000. Also, the deposits can be done only in multiples of 1000, 2000, 3000, etc. This is a drawback to the plan as lesser amount cannot be invested. There is no ceiling on the upper amount for investment which makes this scheme an ideal plan for bigger financial goals. 
  • Interest Rate: The interest rate on Kisan Vikas Patra is determined every financial quarter. Hence there is no fixed interest rate on the scheme. Generally, the interest rate on this scheme ranges between 7.1% to 7.9%, depending on the prevailing market situations. 
  • Tenure: The maximum tenure of the scheme is 118 months i.e. 9 years and 10 months. You cannot choose a tenure on this scheme but can make premature withdrawal. The lock-in period of the scheme is 30 months up to which one is not permitted to make any withdrawal. However, in case of death of the depositor, withdrawal can be made with the court approval. Post the lock-in period, you can make encashment as per your wish. 
  • Tax - Benefits: There is no tax deducted on the interest earned through the scheme. But the investment made in this scheme cannot be used under any section of the Income Tax Act to claim tax deduction. 

Who can invest in Kisan Vikas Patra saving scheme?

All Indian citizens, excluding NRIs and Hindu United Families can invest in this saving certificate scheme. The investor should be a minimum of 18 years old and above. You can also avail nomination facility on this scheme. This is one of the best investment schemes for people who seek risk-free investment avenues. 

Kisan Vikas Patra Vs Other Savings Plans

Each saving plan will have an objective catering the needs of purpose the depositor or investor. Kisan Vikas Patra is an ideal investment plan that gives decent rate of returns. 

This is the best plan when compared to bank or post office savings account which can give you only returns with 4% interest rate. But savings account can be accessed any time and money can be withdrawn as per the need which is not possible with Kisan Vikas Patra which has a lock-in period of 30 months. 

When compared with Recurring Deposit and Fixed Deposit saving schemes, Kisan Vikas Patra produces high returns. But fixed deposits can be used for claiming tax deduction purposes. The tenure on Kisan Vikas Patra is fixed, but premature withdrawal is allowed after the lock-in period. The tenure in an RD or FD, the tenure is flexible, but premature withdrawal may invite penalty. 

When compared with PPF, both are ideal plans for long-term investment instruments. PPF has a longer tenure of 15 years and premature partial withdrawal is possible only after 7 years. PPF account can be used for claiming tax deduction under section 80C of the Income Tax Act, which is not possible for Kisan Vikas Patra. The interest rate and returns are slightly higher in PPF scheme.

Additional Reading: Your guide to Post Office Savings Schemes

Loan Against Kisan Vikas Patra

Loan against Kisan Vikas Patra can be availed for personal and business purposes. The scheme should be taken by the name of the applicant. The loan amount is fixed based on the amount invested on the saving scheme. The interest rate may be lesser than the normal rates as there is an advantage of the collateral for the lender. The approval rate on the loan is also higher. 

To avail the loan, you should have a minimum of Rs. 10,000. However, the minimum amount varies from lender to lender. Following is the loan amount range for different years:

 

 Years of Investment  Loan Amount
 3 Years and above  100% of the amount invested 
 2 years and above and less than 3 years  90% of the amount invested
 Less than 2 years  75% of the amount invested

 

Bottomline

Kisan Vikas Patra is an ideal saving scheme for long-term investment goals. Providing capital protection, the plan can give you guaranteed returns.