This government-backed small savings scheme aims at the welfare of the farmers, particularly. Let us know in detail about it.
What is Kisan Vikas Patra?
Kisan Vikas Patra (KVP) is a popular and safe small-savings instrument that doubles the invested money in 10 years and four months at the current rate. This scheme is backed by the government. After withdrawing it, the government relaunched it on November 18, 2014. The money raised through the KVP is used in welfare schemes for farmers.
Features of Kisan Vikas Patra
Interest rate for Kisan Vikas Patra
The interest rate for KVP is 6.90 per cent compounded yearly.
Maturity period of Kisan Vikas Patra
The maturity period may change based on rate changes. Currently, it is 124 months; 10 years four months.
Capital protection and inflation protection
The capital in the KVP is completely protected, as the scheme is backed by the Government of India. The KVP is not inflation protected. This means that whenever inflation is above the current guaranteed interest rate, the deposit earns no real returns. However, when the inflation rate is under the guaranteed rate, the KVP can manage to give a positive real rate of return.
Investment objective and risks
The main objective of the KVP is to double the sum deposited. The objective of doubling the investment is easy for any investor to understand. The government backing and guarantee make it a popular route of investments for small savers.
Suitability and alternatives
The interest rate in the KVP is guaranteed. Currently, it is 6.90 per cent compounded yearly. The KVP rates are notified every quarter as per the prevailing government-bond rates. However, once you have made an investment, the rate will remain unchanged for you throughout the tenure.
Liquidity is offered as loans and withdrawals, which are subject to conditions. The minimum lock-in period is 30 months, after which it can be encashed by paying a penalty. Also, it can be transferred from one person to another any number of times.
There is no tax benefit on the deposit or the interest that the KVP earns. There is no tax deducted at the source.
Where to buy
One can buy the KVP at any head post office, general post office, any designated nationalised bank, or State Bank of India.
How to buy
To view the current rates on the schemes, go to vro.in/s34211