Kisan Vikas Patra (KVP): Government Savings Scheme in India (2024)

Interest Rates Table for Post Office Savings Schemes

The interest rate was increased from 7.2% to 7.5% for FY 2023-24. Kisan Vikas Patra is a popular investment instrument given its low-risk and guaranteed returns. Interest is compounded annually.

Below is the time-table for change in interest rates for all Post Office Savings Schemes.

Now, as per the schedule, the Indian government has announced the new interest rates applicable to all Post Office Savings Schemes from 1st April 2020 to 30th June 2020.

Documents Required for Kisan Vikas Patra

To avail the benefits of Kisan Vikas Patra, you need to furnish the following documents:

1. Form A

1. Form A1 (If the application is submitted via an agent)
2. KYC documents (Aadhaar card/Passport/PAN card/Voter ID)

When you submit the aforementioned documents, you will receive a KVP certificate. If you lose or damage this certificate, you can request its duplicate copy. You will have to apply at the institution from where you availed of the certificate initially.

How to Obtain Kisan Vikas Patra Online

The process of investing in the Kisan Vikas Patra online scheme is simple. The steps mentioned below can be followed:

Step 1: Go to the India Post website or log in to your internet banking.

Step 2: Choose Kisan Vikas Patra (KVP) and download the KVP Form A.

Step 3: Complete the form by entering your information such as the type of certificate, the investment amount, and the payment method.

Step 4: Complete the nomination form and submit it along with the KYC documents to the bank or post office.

Step 5: After the documents are verified, deposit the funds using cash, a locally executed cheque, a pay order, or a demand draft made out to the postmaster.

Step 6: If you don't pay by demand draft, pay order or cheque, a KVP certificate will be issued to you right away. You can ask the executives to email the certificate to you.

How to Obtain Kisan Vikas Patra Offline

The steps to get a KVP certificate offline are listed below:

Step 1: Visit the nearest post office and get Form-A which is the KVP application form.

Step 2: Fill out the form with the necessary information, then submit it.

Step 3: Fill and submit Form-A1 if you are making the investment with an agent's help.

Step 4: Submit a copy of any identity document required for the KYC process.

Step 5: Following document verification and completion of the necessary deposits, you will receive the KVP Certificate. You can also choose to obtain the KVP certificate on your registered email address.

Kisan Vikas Patra Eligibility

The following are the Kisan Vikas Patra eligibility:

1. The applicant must be an adult and a resident Indian.
2. The applicant can apply for Kisan Vikas Patra in their own name or on behalf of a minor.
3. Trusts are eligible to invest in Kisan Vikas Patra. HUFs (Hindu Undivided Family) and NRIs are not eligible to invest in KVP.

Kisan Vikas Patra Types

A Kisan Vikas Patra comes in the following types:

1. Single Holder Type Certificate: This type of KVP is issued to an adult individually for self or on behalf of a minor.
2. Joint A Type Certificate: This type of KVP is issued to 2 adults jointly and is payable to both the owners and to the survivor.
3. Joint B Type Certificate: This type of KVP is issued jointly to two adults and is payable to either the owners or to the survivor.

KVP, when of Type A and Type B, is released to both the combined owners. In case adulthood is due to both the heir and owners or due to either of the heirs, it is released to combined owners.

Kisan Vikas Patra Interest Rate

The current interest rate has increased from 7.2% to 7.5%. The maturity period has also been set at the maximum of 120 months. The principal amount can be withdrawn after this period only.

Here is an example of how interest accrues and doubles at maturity upon investment of Rs.1,000 in KVP onor after 1 April 2020 at an interest rate of 7.2%.

How to Transfer Kisan Vikas Patra Account?

A Kisan Vikas Patra certificate can be transferred from one Post Office to the other or from one person to another.

Transfer from One Post Office to Another: A Kisan Vikas Patra certificate can be transferred from one post office, from where it was originally bought to another post office. In order to transfer a KVP certificate, the investor must submit a handwritten consent to the officer at a concerned post office. The transferee must be a resident Indian and must be eligible to purchase the KVP certificates.

Transfer from One Person to Another: A KVP certificate can also be moved from one individual to another for which a written letter must be submitted to the Post Office for the same. The following conditions/specifications apply for the same:

1. Transfer from the name of the deceased to his or her heir
2. From one owner to the combined owners
3. From combined owners to the name of one of the owners
4. From the owner to a judge of law and also to other individuals as ordered by a Court of Law

Kisan Vikas Patra Maturity Period

The maturity period for Kisan Vikas Patra is nine years and five months. On maturity, the amount invested gets doubled. If you invest an amount of Rs.10,000, after a period of nine years and five months, the amount will increase to Rs.20,000.The current interest rate of Kisan Vikas Patra has been increased from 7.2.% to 7.5% effective from 1 April 2023. Therefore, the invested amount will double in 10 years. for Q4 of FY2022-23.

Kisan Vikas Patra Form

In order to purchase a Kisan Vikas Patra certificate, one must fill in the application form and furnish the required information. The required information must be provided in the identity slip also. In the application form, you will be required to mention the following details:

1. The amount for which the KVP certificate is to be purchased.
2. The method of payment can be either cash or cheque
3. Type of KVP certificate, whether it is single or joint "A" or joint "B"
4. The name of combined owners if the KVP type is not single
5. In the case of the minor, the date of birth of the minor and his guardian who can encash the KVP amount
6. Name of all nominees with full address and date of birth

This form must be duly signed by the investor. The date, address, and signature of the witness to a nomination will also be specified in the slip.

In the identity slip, information like the serial number of the KVP certificate, issue price, date of encashment, postmaster signature and remarks like that of duplicate issue and transfer will be mentioned. To encash the KVP, one must present the identity slip. Hence, mentioning the right details in the KVP identity slip and KVP Form is of utmost importance.

Kisan Vikas Patra Benefits

The following are some of the benefits of the Kisan Vikas Patra Scheme:

1. Long-term Savings - With the Kisan Vikas Patra, you can start saving early with an amount as low as Rs. 1000. The Kisan Vikas Patra certificates can be bought for amounts as low as Rs. 1000 and going up to as much as you want. There is no upper limit on the amount that you wish to invest. The value is said to be doubled in nine years and five months i.e., 120 months. The value that the holder will receive on the completion of the term is declared on the Kisan Vikas Patra certificate itself.
2. 100% Security - We all want security on the investments that we make. The Kisan Vikas Patra scheme gives us just that. Since it is a Government-owned scheme, the returns are fixed and secure. Since the amount that you will receive is declared on the certificate, you will have security on the investment that you have made and the amount that you will receive at the end of the term.
3. Fixed Rate of Interest - Kisan Vikas Patra interest rate is fixed on the amount that you are investing. This rate of interest ensures a doubling of the principal amount in 120 months and is secured since it is a government bond.

1. Collateral for Loan - The Kisan Vikas Patra certificate can be used as collateral while applying for a loan. Most banks and financial institutions accept this certificate as collateral before issuing you any loan.
2. Non-Transferable - The benefits of Kisan Vikas Patra are availed only by the holder of the Kisan Vikas Patra certificate. To have this transferred to another name, the permission of the Postmaster is required along with certain other formalities.
   1. Tax Benefits - At the time of encashment or disbursal of the Kisan Vikas Patra scheme, tax is not deducted at source; it is TDS exempted and paid in full to the holder. However, it is the responsibility of the certificate holder to pay the taxes on the interest accrued over the term of the scheme. This scheme is completely exempted from Wealth Tax.
3. Physical Instruments of Investment - The Kisan Vikas Patra saving schemecomes as a simple printed certificate that can be saved in a physical form. There is no demat form for this certificate, and it cannot be traded for in the secondary market.
4. Fixed Lock-in Period - The fixed lock-in period on this scheme is two and a half year. If you have an emergency financial requirement, you can encash this money prematurely after two and half years from the date of issuance with some amount of interest on the same.

KVP Rules and Guidelines

After relaunching KVP in 2014, the Government of India has specified a set of rules and guidelines for the same. As a KVP investor, you must be familiar with the KVP rules and they are given below for your reference.

1. Title and commencement - All rules with regard to the KVP scheme will be called the "Kisan Vikas Patra Rules, 2014" and will be effective the day they are published in the Official Gazette.
2. The definition of certain words in the rules, unless the context otherwise requires, will mean the following:

• Act - Government Savings Certificate Act, 1959
• Cash - Indian Cash currency
• Certificate - Kisan Vikas Patra
• Form - Form annexed to these rules
• Post Office - Any departmental post office in India doing savings bank work
• Identity Slip - an identity slip issued to the holder of the certificate
• Bank - Any branch of the State Bank of India, all its associate banks and designated branches of commercial and nationalized banks that are authorized for the Public Provident Fund Scheme.

1. Denomination of Certificates - Kisan Vikas Patra scheme certificates will be issued in denominations of Rs.1,000, Rs.5,000, Rs.10,000, and Rs.50,000 only.
2. Application of Post Office Savings Certificate Rules, 1960 - The process of applying for the Kisan Vikas Patra remains unchanged and is the same application process as that of the Post Office Savings Certificate Rules, 1960.
3. Purchase of the Certificate - Any number of KVP certificates of the specified denominations can be purchased.
4. Type of Certificates - The certificate for Kisan Vikas Patra can be issued as one of the following types:

• Single Holder Certificate - This certificate is issued to an adult for himself or on behalf of a minor or to a minor.
• Joint 'A' Type Certificate - This type of certificate is issued jointly to two adults and is payable to both the holders jointly or to the survivor.
• Joint 'B' Type Certificate - This type of certificate is issued jointly to two adults but payable to either of the two holders or the survivor.

1. Issuance of Certificate - The KVP certificate is issued as soon as the payment is made. The date of the certificate is the same as the date of the payment. If for any reason, the Kisan Vikas Patra Certificate cannot be issued immediately, a provisional receipt is issued which can be later exchanged for a certificate.
2. Procedure of Purchase of Certificate - The applicant needs to be present and submit an application form to buy a Kisan Vikas Patra. The payment for this certificate can be made by cash, a demand draft drawn in favour of the Postmaster or a signed withdrawal form or cheque.
3. Transfer of Kisan Vikas Patra Certificate from one person to another person - A Kisan Vikas Patra can be transferred from one person to another person by writing to the postmaster requesting the same. The following are the cases in which the transfer can be sanctioned:
   1. from the name of the deceased to their legal heir
   2. from a single holder to the names of the joint holder
   3. from a holder to the court of law or another person under the orders of a court of law.
4. Pledging of Kisan Vikas Patra Certificate - On an application made in Form B by the transferor and transferee, the Postmaster may allow the transfer of any certificate as security at any time to
   1. The President of India or Governor of State
   2. The RBI or a Scheduled Bank or a Cooperative Society including a Cooperative Bank
   3. a government agency or a corporation
   4. a Housing Finance Company approved by the National Housing Bank and notified by the Central Government of India
   5. a local authority; provided that the transfer of the certificate on behalf of a minor shall not be permitted under this rule.
5. Nomination - The purchaser of the certificate, the single or joint holder can nominate any person who in the event of the death of the certificate holder shall be entitled to hold the certificate. The payment of the amount will be made to the nominee at the maturity of the scheme.
6. Post Maturity Interest - When the repayment of the amount inclusive of interest is due and has not been made, the interest on the amount due shall be allowed under the following conditions:
   1. It will be simple interest and calculated at the rate applicable from time to time to Post Office Savings Account.
   2. Any part of the period, for the purpose of payment of interest, that is less than one month shall be ignored.
   3. The depositor can receive the interest in a lump sum at the time of repayment of the due amount.
7. Replacement of destroyed or Lost Certificate - If a Kisan Vikas Patra is lost, damaged or destroyed, the person can apply for a duplicate of the same at the post office or the bank where the certificate was not issued. If the application has been made to a post office or bank where it was not issued, the application will be forwarded to the right location. The application should have the certificate number, amount, date and the circumstances of destruction, defacement, or loss. A duplicate certificate issued can be treated as an original certificate for all purposes except that it won't be encashable without prior verification.
8. Place of encashment of Kisan Vikas Patra - The certificate can be encashed at the post office or the bank where it was issued. It can also be encashed at another post office or bank provided the issuing authority is satisfied with the verification from the location of the issue and the person holding the certificate.
9. Encashment of Kisan Vikas Patra on Maturity - For any denomination of certificate issued, the period of maturity will depend on the interest rate applicable on the date of issue of the certificate. The amount inclusive of interest which is payable while encashing a certificate after the expiry of the maturity period will be double the deposited amount.
10. Premature Encashment of Kisan Vikas Patra Certificate - The certificate can also be encashed before the completion of the maturity under certain circumstances such as the death of the holder or any of the holders, in case of a joint holder, when ordered by a court of law, or on forfeiture by pledge being a Gazetted Government Officer. The minimum lock-in period for this scheme is two and a half years and can be prematurely encashed any time after this period. The simple interest is calculated on the rate from time to time under the scheme.
11. Discharge of Certificate - On the encashment of the certificate, the holder will sign at the back of the certificate as a sign of having received the payment.
12. Rectification of mistakes - Any clerical and arithmetical mistakes with regard to the certificate can be rectified by the Postmaster General provided it does not cause any financial loss to the government.
13. Power to relax - If a holder is facing undue hardship, the rules may be made flexible for them on humanitarian grounds, which is not inconsistent with the Act if recorded in writing and approved by the Central Government.

Kisan Vikas Patra Encashment

If you wish to encash a Kisan Vikas Patra Certificate, you can avail of the same at the Post office where the KVP was issued. In case you need to encash it at a different post office, some formalities have to be completed. In order to encash a KVP, you need to submit the identity slip that was offered at the time of the KVP certificate purchase. To encash a KVP certificate, all you have to do is give a letter in writing to the concerned post office and also present your identity slip.

If you wish to pull out your principal before the maturity period, you can do so only after 2 years and 6 months. Kisan Vikas Patra can also be prematurely encashed before its maturity under the following circumstances:

1. If ordered by a Court of law
2. On forfeiture by a pledge or by a Gazetted Officer
3. Upon the death of the KVP holder or any of the holders in the case of joint KVPs

Kisan Vikas Patra Withdrawals

A Kisan Vikas Patra scheme can be closed before maturity. The principal, along with interest can be withdrawn. The period for premature withdrawal of KVP is after 2 years and 6 months from the date of issuance, which is also the lock-in period. To avail KVP premature withdrawal, the holder must give in writing to the Post Office following which the amount will be given. KVP encashment is not allowed unless the KVP holder is deceased or only upon court orders.

Kisan Vikas Patra Nomination

Certificate holders can make nominations at the time of purchase by completing Form C singly and jointly. In the event of the death of the sole holder/joint holder, the benefits will be provided to the nominee. If you did not make a nomination at the time of purchase, you could do it after purchasing the certificate but before its maturity. A duly filled Form C has to be submitted to the person who registered the certificate at the post office or bank.

Loan Against KVP

A holder of Kisan Vikas Patra can avail of a loan against the same. The following are the conditions for availing ofa loan against KVP:

1. The loan applicant must have a Kisan Vikas Patra under his own name.
2. The loan against KVP can be availed for business or personal purposes only. The loan cannot be availed for any speculative ones.
3. Different banks have different charges and interest rates for loans against KVP. The charges vary from time to time and select banks may charge a processing fee for a loan grant.
4. The loan should be repaid within the tenure of Kisan Vikas Patra.
5. The margin and loan amount will be decided by the bank based on the KVP investment and maturity.