The instrument of Kisan Vikas Patra (KVP) scheme was launched by the Centre in April 1988. It was a completely different era with a controlled economy and far fewer instruments of investment. As the name implies, it was originally meant for farmers who had less access to traditional banking systems. This instrument was made available to the post office. But it was quickly made available to people of any profession who met the eligibility criteria.
The interesting point is the humble KVP has survived the immense transformation of the Indian economy and is still popular with a large number of Indians. A quick look at the features will make it clear why it is still valued by many as an investment instrument.
What is the KVP scheme
The Kisan Vikas Patra is a part of the small savings instrument bouquet. It is available from post offices and offers assured returns to investors – the instrument carries a sovereign guarantee and offers complete peace of mind. It is issued as a certificate from any post office in India and selected public sector banks. In order to deposit in KVP, the applicants have to be a resident of India and more than 18 years. However, it must be noted that an adult can apply on behalf of a minor.
One can deposit as little as Rs 1,000 in KVP. There is no ceiling of investment but the amount has to be in multiples of Rs 1,000. If the investment exceeds Rs 50,000 the investor would require to submit PAN.
What is the maturity period of KVP
The Kisan Vikas Patra comes with a fixed tenure of 115 months, or 9 years 7 months. One must note that after the tenure expires, the total amount if available to the investor for withdrawal. The amount of funds will accrue interest until it is withdrawn. A significant utility of KVP lies in the fact that these certificates can be offered as collateral to secure loans from banks. Any secured loan carries significantly lower interest rates than unsecured loans. The certificates will be returned to the investor once the loan is paid off completely.
Even in this era of equities and mutual funds providing superior returns, several instruments are valued by a large number of Indians for their absolute security. The good old Kisan Vikas Patra is one of these. Personal Finance Business News – Personal Finance News, Share Market News, BSE/NSE News, Stock Exchange News Today
