Everything You Need To Know About The Kisan Vikas Patra (KVP)


There are lots of different investment schemes out there. Mutual funds, equities, and bonds are among the most popular these days, but they’re not really fit for all types of investors. Those with a low-risk profile will find it difficult to adjust to the volatility of these schemes, while the fundamentals of these instruments are also somewhat complicated to understand for the common man.

Such individuals should, instead, opt for government schemes as they provide unparalleled security and guaranteed returns. The Kisan Vikas Patra (KVP), which is sometimes also called Indira Vikas Patra, is one such saving scheme that investors with a low-risk appetite can go for.

What is Kisan Vikas Patra?

Launched in 1988 by the Indian Post, the Kisan Vikas Patra is a government-backed scheme that doubles investors’ investment after a certain period of time. It was opened with the objective of allowing people from all backgrounds to accumulate a large corpus. The scheme has “Kisan” in its name as it was initially launched keeping farmers in mind. Today, however, everyone can invest in this savings scheme.

The following three types of certificates are available under Kisan Vikas Patra:

  • Single holder type certificate

This type of Kisan Vikas Patra account is allotted to a single adult. Minors can also open this type of account, although it has to be maintained and named after a parent or guardian.

  • Joint type (A) certificate

This type of account works just like a joint account issued by banks. It is issued jointly to two individuals, albeit both of them must be adults. The benefits are shared by both the account holders if they’re both alive. In the case either of them dies, the other will receive the full amount.

  • Joint type (B) certificate

The only difference between this type of certificate and joint type (A) certificate is that it offers the pay-out after maturity to both the account holders, as well as the nominees in case the holders are dead.

What are the key features and benefits of Kisan Vikas Patra?

The Kisan Vikas Patra has a host of attractive features and benefits like:

  • Guaranteed returns

Not every investment vehicle can claim to offer guaranteed returns to investors. The Kisan Vikas Patra is an exception as it is backed by the government of India. Your money is extremely safe and you’re guaranteed to earn returns even if the market crashes or the country is in recession.

  • Appealing rate of interest

Kisan Vikas Patra has historically offered interest in the range of 7-8% per annum. The Kisan Vikas Patra’s interest rate for 2019 was 7.7%. Currently, the KVP interest rate is 6.9%, which is more than good enough considering that it comes with no risk. . The interest rate offered changes periodically and is decided by the Ministry of Finance.

  • Investment flexibility

You don’t need a bag full of money for investing in this investment scheme. You can start by depositing as little as ₹1,000 and there’s no upper limit on the amount that you can invest in this scheme. The amount must be a multiple of ₹1,000 and you’ll need to produce your PAN details if you’re investing more than ₹50,000.

  • Taxation method

Although it doesn’t come under the 80C deductions, the money deposited in the Kisan Vikas Patra is exempt from Tax Deducted at Source (TDS) if you withdraw it post maturity. Most other types of investment schemes, meanwhile, are fully taxable.

  • Nomination facility

Another great feature of the Kisan Vikas Patra is that you can select a nominee of your choice. The said individual will receive the benefits of the scheme in the case of your death. A minor can also be selected as the nominee in this scheme.

  • Tenure

The Kisan Vikas Patra has a tenure of 124 months, following which you can withdraw the entire amount. If you don’t, the account will continue to yield returns until you decide to withdraw.

  • Premature withdrawal

Although premature withdrawal isn’t allowed, you can withdraw money from the account in case of an emergency, like the demise of the account holder.

  • Loan against the certificate

If you’ve invested in a Kisan Vikas Patra scheme, you can use it as collateral to avail of loans from national as well as private banks. The certificate can also help you grab the loan at better interest rates.

What are the eligibility criteria for investing in Kisan Vikas Patra?

You must fulfill a few basic requirements before investing in this scheme. They are:

  • You must be a resident of India.
  • You must be over 18 years of age. In case you’re a minor, you can still open an account but it has to be maintained by your parent/guardian.
  • You should not be a member of Hindu Undivided Families (HUFs). Non-Resident Indians (NRIs) are also not allowed to invest in Kisan Vikas Patra.

What documents are required for investing in Kisan Vikas Patra?

The government tries to make investing in a Kisan Vikas Patra really easy. Hence, you only need a handful of basic documents for opening an account. They are:

  • Identity proof for KYC process. You can carry anything from your Aadhaar card, PAN, Voter ID card, Driving License, and Passport.
  • Kisan Vikas Patra application form
  • Address proof
  • Birth certificate

How do you invest in a Kisan Vikas Patra scheme?

The steps to investing in a Kisan Vikas Patra scheme are:

  • Collect and fill the application form and Form A. You can download it online or get it at your nearest post office.
  • Submit the form to the post office or a bank that offers this facility.
  • Also, submit supporting KYC documents and proof of address.
  • After the documents are verified, make the deposit through either cash, demand draft, or cheque in favour of the postmaster.
  • You’ll receive the Kisan Vikas Patra through the mail. Keep it carefully as you’ll need it at the time of maturity, or if you’re applying for premature withdrawal.

Is premature withdrawal allowed?

Yes, premature withdrawal is allowed in a Vikas Patra scheme in case of emergencies. However, it has certain limitations at the same time. They are:

  • If you’ve withdrawn the amount within one year, you will not receive any interest. You might also have to pay a penalty.
  • In case you withdraw after a period of 1 year and up to 2.5 years, you will receive interest but at a reduced rate.
  • If you withdraw after a period of 2.5 years, you won’t have to pay any penalties and you’ll also receive interest at the applicable rate.

Can we transfer Kisan Vikas Patra to another person?

Yes, Kisan Vikas Patra can be transferred from one person to another person for which a written letter must be submitted to the Post Office for the same. The transfer can be done in the following cases:

  • It can be transferred to the nominee/legal heirs on the death of the account holder.
  • It can be transferred to one of the joint holder(s) on the death of the account holder.
  • On pledging of account, it can be transferred to the specified authority.
  • The ownership can be transferred to the judge of the law, and even to other persons, as directed by the Court of Justice.