Salient Features of Kisan Vikas Patra
The Kisan Vikas Patra, or KVP, is among the guaranteed returns savings scheme. The scheme, being backed by the government, offers a good long term savings instruments to the farmers of the country. It is meant exclusively for the farming community and can be opened by an adult farmer or on behalf of a minor through an adult guardian.
The KVP savings certificate is a sure shot way to double your deposits within a specific time frame, which here is 96 months or 8 years. For instance, you have made a deposit of Rs.50,000 in April 2015. You will then receive an amount of Rs.1 lakh in April 2023.
How does the KVP interest rate work?
The interest on this scheme, like other savings schemes, is compounded on a yearly basis. The compound interest lets you earn interests on the principal + interest amount from the previous year, unlike simple interest which only calculates interest on the principal amount each year regardless of the accrued interests in the account. In short, the compound interest will let you earn higher amounts on your deposits than simple interest.
The interest rate on Kisan Vikas Patra deposits is 8.70% p.a. compounded annually.
Features of KVP certificates
- The scheme is available in deposit denominations of Rs.1,000, Rs.5,000, Rs.10,000 and Rs.50,000, which are fixed.
- There are no restrictions or upper limit on amount that can be invested subject to denominations being used as denoted above.
- KVP certificates come in with a lock-in period of 30 months or 2 ½ years during which you cannot withdraw funds from the account unless you pay penalties.
- The minimum age requirement for enrolling in this scheme is 18 years.
- The scheme is not applicable for NRIs, whether individually or as part of a Hindu Undivided Family (HUF).
- The deposit can be transferred to another individual.
- The account matures in 103 months or 8 years 7 months.
- On making deposits, you will receive an identity slip which should be produced while making withdrawal or transfer claims.
- You do not need a PAN card to make deposits under the Kisan Vikas Patra scheme.
What are the terms for premature withdrawal?
Premature withdrawal is allowed at any point of time in the scheme tenure. However, premature withdrawal applications within 2 ½ years of purchase of certificate will attract penalties.
- Premature withdrawal within 1 years will attract no interest.
- Premature withdrawal after 1 year and up to 2 ½ years will attract interest at a reduced rate of 8.40% p.a.
- Premature withdrawal after 2 ½ years will attract no penalties.
- In case you lose your KVP certificate, you should approach the nearest Post Office for a duplicate certificate. It is advisable to collect and preserve the Identity Slip that you receive while making deposits.
- The proceeds from the scheme will be forwarded to the legal heir or nominee of the deposit holder on maturity if he/she does not survive during the scheme tenure.
- There are no tax benefits on KVP deposits.