Kisan Vikas Patra (KVP)

Kisan Vikas Patra (KVP) doubles your money in 7 years and 3 months with the advantage of premature withdrawal. KVP is sold through all Head Post Offices and other authorised post offices throughout India. The rate of return is 9.75 per cent, compounded annually.

KVP accumulates money at a fixed rate, and your money doubles in 7 years and 3 months. But KVP is not meant for regular income. It is for those looking for a safe avenue of investment without the pressing need for a regular source of income.

Features:

• The minimum investment in KVP is Rs 100. Certificates are available in denominations of Rs 100, Rs 500, Rs 1,000, Rs 5,000, Rs 10,000 and Rs 50,000. The denomination of Rs 50,000 is sold through head post offices only. There is no limit on holding of these certificates. Any number of certificates can be purchased. A KVP is sold at face value; the maturity value is printed on the Certificate.
• It is a good option if you are looking for hassle-free investment as it assures a certain sum of money at the expiry of the duration of your investment.
• With a fixed rate of return, KVP does not provide safeguards against the perils of high inflation rates.
• Depending on whether the finance company or the bank from where you are raising the loan accepts it or not. Some banks accept it for raising house loans.
• Income is assured at the prescribed rate of interest. As mentioned, this is a risk-free investment channel as the KVP comes with the backing of the Government of India.
• Since the KVP has the backing of the Government of India and is, therefore, extremely safe, it does not require any commercial rating.
• KVP is not a bearer certificate, and is not easily transferable. Permission of the post master is required for any transfer. These cannot be traded in the secondary market.
• KVP cannot be traded in the secondary market and, hence, the question of its market value does not arise.
• KVP is held physically in the form of certificates that are issued to the investors by the post office. The option of holding KVP in demat form is not available.
• Although no TDS is applicable on the interest income from KVP, there are no tax incentives as per the provisions of the Income Tax Act, 1961.
• Maturity on providing proper identity and by simple discharge of the certificate on the reverse.

Returns:
KVP Scheme doubles money in seven years and three months.

What is the liquidity of KVP?
If the premature encashment takes place within a period of one year from the date of purchase of the certificate, only the face value of the certificate shall be payable. No interest is payable in this case.

After the expiry of one year, but before two years and six months from the date of the issue of the certificate, the face value of the certificate together with simple interest at the specified rate for the completed months for which the certificate has been held, shall be payable.

If a certificate is encashed any time after expiry of two-and-a-half years, the amount payable is as specified by the government from time to time.