Kisan Vikas Patra

INTRODUCTION

In order to prevent any mismanagement, the government reinstated the once-popular small savings scheme with several modifications, including the requirement for PAN Card verification for investments over Rs. 50,000 (~US$ 600) and income proof (pay slips, bank accounts, ITR documents, etc.) for deposits over Rs. 10 lakh (~US$ 12,000). The scheme has a minimum investment of Rs. 1,000 (about US$ 12) and no maximum limit. Its maturity length is 115 months, or 9 years and 7 months.

NEED

The government launched the Kisan Vikas Patra program to increase the nation's domestic savings, which fell from a peak of 36.8% of GDP in 2008 to 30% of GDP in 2012–2013. The government wanted to increase the financial independence of low-income participants from semi-urban and rural areas through this low-risk savings platform.

POLICY DETAILS

The National Savings Institute classifies KVP certificates into the following categories:

• An adult may open a "Single Holder" type account for themselves, on behalf of a minor or an incompetent person over whom they are the guardian, or on behalf of a minor who has become 10 years old. An individual receives a KVP certificate in their name. Additionally, a person may provide a KVP certificate on behalf of a juvenile; in this case, the certificate will be issued in the person's name.

• Up to three individuals may open a joint account in the name of "Joint A" type. Adults investing jointly are given a KVP certificate, which states that the money will be paid to all holders jointly or to the survivors when the certificate matures.

• Up to three individuals may open a joint account in the name of "Joint B" type. The adults investing jointly receive a KVP certificate; however, in this instance, the sum payable to the survivor or survivors, or to any account holders, at the time of the investment's maturity.

Eligibility:

Any Indian citizen over the age of eighteen may participate in this program and purchase a certificate; however, minors may also participate with the assistance of an adult and obtain a KVP certificate. In addition, the scheme does not impose an age restriction on investors, making it advantageous for elderly individuals.

Documents Required:

To avail benefits of the KVP scheme, citizens are required to submit the following documents:

• Identity proof for the KYC process (Aadhaar card/PAN/Voter ID card/Driving License/Passport/Job card issued by NREGA signed by the State Government officer/Letter issued by the National Population Register containing details of name and address)

• Address proof

• KVP application form

• Birth certificate

Kisan Vikas Patra Rate of Interest:

The interest rates on KVP investments are set by the Ministry of Finance and are not impacted by market fluctuations. Furthermore, the interest rate is reviewed and adjusted by the government on a quarterly basis. Deposits put into KVP accounts will start earning interest in April 2024 at a compound annual interest rate of 7.5%.

Rules for Kisan Vikas Patra Withdrawal:

In contrast to many other long-term savings plans, KVP permits early withdrawals by investors; nevertheless, there are some restrictions. For example, the plan has a minimum lock-in duration of two and a half years or thirty months. Any early redemption beyond the two and a half-year mark may result in penalties or lower interest rates, and it can only be carried out upon court order, forfeiture by a pledge or Gazetted Officer, or upon the death of the KVP holder, or all holders in the case of joint KVPs.

FUTURE

• With the goal of ensuring that a minimum of 100 households are served by postal products, India Post initiated a campaign in September 2020 to promote all postal products and services offered at the village level under the "Five Star Village" initiative. The government wants to close the gap between the public's knowledge and the availability of postal goods and services, particularly in rural areas.

  
  

• Following the 2014 regulation changes, the KVP plan has become one of the most reputable and investment-worthy plans. The program helps raise the nation's savings rate in addition to giving small investors a safe and secure outlet for their investments. Even though Fixed Deposit schemes are preferred by the majority of conservative investors, many are choosing and choosing alternate schemes. Because the Government of India backs the KVP plan, it is seen as a safe investment option and gives higher yields than bank FDs for these investors.