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Detailed Analysis of Kisan Vikas Patra

"Kisan Vikas Patra (KVP)" or "Farmer's Development Letter" is a saving certificate which was first launched in 1988. It was successful in the early months but afterwards the Government of India set up a committee under supervision of Shayamla Gopinath which gave its recommendation to the Government that KVP could be misused. Hence the Government of India decided to close this scheme and KVP was closed in 2011.
However the new Government formed in 2014 decided to relaunch this scheme following which the scheme was relaunched in 2014.

"In the last 2-3 years, savings rate in country has declined from a record high of 36.8 per cent to below 30 per cent due to slowdown in the economy. It is, therefore, necessary to encourage people to save more," Finance Minister Arun Jaitley said during the launch of the revamped KVP.

The “Kisan” in Kisan Vikas Patra does not mean that only farmers can buy these saving certificates but means that the revenue mobilized by this scheme will be used by the Government of India in welfare schemes for farmers. Any individual can safely invest and save their money in the form of Kisan Vikas Patra.

Features of KVP:

Kisan Vikas Patra doubles the money invested in eight years and seven months. The Directorate of Small Savings Government of India, sells these saving bonds through all Post Offices in the country so that the scheme can be accessed by citizens from all over the country. A KVP can be encashed after two and a half years from the date of issue at the value it has been bought and the interest accrued for the period.

How to Invest in KVP?
Kisan Vikas Patra can be purchased from any Post Office by filling a form and depositing the amount in cash or by cheques or demand drafts with the filed form and your photographs. The Post Office will issue a Certificate called Kisan Vikas Patra with your name, amount, date of maturity and amount on the date of maturity. 

Who All Can Invest in KVP?
You can invest in Kisan Vikas Patra
  • If you are a citizen of India and an adult; in your own name, or on behalf of a minor. 
  • A trust is also eligible to invest in KVP. 
  • Two adults can jointly buy KVP.

Who All Are Not Eligible?
Kisan Vikas Patra is not for business entities such as a company or institutions. NRIs or HUF (Hindu Undivided Family) are also not eligible to invest in KVP.

Kisan Vikas Patra VS Other Saving Schemes:
One major draw of the KVP is that there is no ceiling on investment. However, bank deposits, which also do not have any investment limits, are offering better rates than the KVPs. Small private banks, such as Lakshmi Vilas Bank, Karnataka Bank and a few PSU banks, are offering up to 9% on fixed deposits of 8-10 years. However, there are other advantages like greater liquidity and ease of investment.

How Kisan Vikas Patra score high compared to other small saving schemes? 
  • Investors can invest in this safe investment scheme instead of investing in some Ponzi schemes. 
  • These KVP’s offer higher liquidity to investors who can sell them after 2.5 Years. National Saving Certificates (NSC) on the other hand have 5 year maturity period. PPF has 15 year maturity period. 
  • Kisan Vikas Patra comes with attractive interest rate of 8.7% per annum. NSC Offers 8.5% and Post Office Term deposit offers 8.4% interest rates. PPF on the other hand, offers 8.75%, however, this would get changed every year. 
  • You can invest any amount in Kisan Vikas Patra. You can gift such KVP’s to minor children, friends and relatives. However, it would attract gift tax for them. 
  • You can transfer such KVP’s from one post office to another. Currently, if you buy NSC from one post office, it would be difficult if you transfer or move to another city.

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