KISAN VIKAS PATRA
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Almost 30 months after the Centre discontinued the Kisan Vikas Patra (KVP), Finance Minister Arun Jaitley announced its revival in his Budget 2014. This instrument was earlier discontinued due to fears of Money Laundering as it was a Bearer Instrument and both the amount invested and the amount received on maturity could be received in cash.
However, discontinuation of Kisan Vikas Patra (KVP) was hurting the savings mobilisation of small investors and therefore these have been re-introduced from 2014 with certain modifications like:-
- Maturity Proceeds won’t be paid in Cash but would be transferred to the Post Office Savings Account. As the maturity proceeds will go to the Post Office Savings Account, this will dilute its bearer nature.
- No KYC Norms would be applicable at the time of purchase of KVP
- TDS @ 10% would also be deducted on the Interest earned on KVP
- More changes expected to be notified soon
Meaning of Kisan Vikas Patra
Kisan Vikas Patra is an instrument on which fixed interest is paid by the Govt. This instrument is sold by the Govt and can be purchased through any Post Office. Kisan Vikas Patra can be purchased by making payment either in cash/ cheque/ pay order/ demand draft.
The Kisan Vikas Patra is of the following types:-
- Single Holder Type Certificate: Issued to an Adult for himself or on behalf of a minor
- Joint A type Certificate: Issued jointly to 2 adults payable to both the holders jointly or to the survivor.
- Joint B type Certificate: Issued jointly to 2 adults payable to either of the holders jointly or to the Survivor.
Investment in this instrument is only allowed to Resident Indians and therefore NRI’s cannot invest in this instrument. HUF is also not allowed to invest in this instrument.
A person interested in purchasing this instrument is required to submit an application in Form A or Form A1 either in person or through an agent of the small savings scheme.
Form A (No Background Colour Form) is to be used in case of direct investment and Form A1 (Coloured background Form) is to be used in case the investment is made through an Agent.
If the payment is made through Cash – the Instrument is issued immediately. However, if the payment is made through Cheque/ Pay Order/ Demand Draft – the Instrument is issued on the date on which the payment gets cleared.
At the time of issue of the Certificate, the buyer should also request for Identity Slip which would be required in case of loss of the certificate and also required for easy processing of the payment at the time of maturity.
Salient Features
| Feature | Description | ||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Eligibility | Any adult individual singly or two adults jointly. A guardian on behalf of a minor. |
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| Minimum amount | Available in denominations of Rs. 100/-, Rs. 500/-, Rs. 1000/-, Rs. 5000/-, Rs. 10,000/-, in all Post Offices and Rs. 50,000/- in all Head Post Offices. | ||||||||||||||||||||||||||
| Maximum amount | No maximum limit | ||||||||||||||||||||||||||
| Maturity period | 8 years & 7 months. | ||||||||||||||||||||||||||
| Interest Rate | 8.40 per cent per annum compounded yearly. Money doubles in 8 years 7 months. |
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| Nomination facility | Available | ||||||||||||||||||||||||||
| Transferability | Transferable from one Post Office to another. KVPs can also be transferred from one person to another. On an application being made in the prescribed Form by the transferor and transferee, the Postmaster may permit the transfer of any certificate (pledging of certificate) as a security. Transfer of the KVPs purchased on behalf of minor is permitted only if his guardian certifies that the minor is alive and the transfer is for the benefit of the minor. |
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| Encashment | KVPs can be encashed at the Post Office of its issue. These can also be encashed at any other Post Office if the Officer-in-Charge of that Post Office is satisfied with the production of Identity Slip or on verification from the Post Office of issue that the person presenting the certificate for encashment, is entitled thereto. |
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| Premature Encashment | Facility for premature encashment as per the table given below (for the KVP purchased on or after 1st March 2003). Maturity value for Rs. 1,000/- denomination
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