Kisan Vikas Patrika (KVP) Interest Rate in 2023

Kisan Vikas Patra commonly known as KVP is an attractive investment option known for its high interest rates and risk-free savings option. Let us discuss this popular scheme and its interest rate in this post.

When it comes to the risk-free options of savings and investments, the KVP or the Kisan Vikas Patra scheme comes to the fore with its striking interest rates. At present the interest rate of KVP is 7.2% p.a. However, it keeps changing periodically as per the decisions of the Ministry of Finance.

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What is Kisan Vikas Patra?

It is a scheme first introduced in the year 1988 by the postal department of India. Commonly termed as KVP, this savings certificate option supports common people with small savings over a long duration so that they could secure their future.

KVP allows a fixed rate of interest and it works with simple calculations. The investment under KVP doubles within a tenure of 124 months, which is pre-decided. KVP is available in the form of savings certificates which can be bought from any of the post offices in India or from selected government banks. The deposit amount under KVP has to be a minimum of INR 1000 or a sum that is multiples of INR 100. However, there is no limit to the maximum sum that is invested under the scheme.

The Kisan Vikas Patra was originally designed for the Indian farmers as suggested by the name of the scheme. Later, the scheme was made open for everyone alike. In 2011, the government had closed this plan, which again was reintroduced in the year 2014 with the clause that a PAN Card submission is obligatory in case of investments above INR 50, 000. Further, income proof is also made compulsory in case of an investment that is greater than INR 10 lakhs to prevent the cases of money laundering under KVP.

Types of Certificates under Kisan Vikas Patra

Below are the various types of KVP certificates:

• Single Holder Certificate
• Joint ‘A’ Certificate
• Joint ‘B’ Certificate

A Single Holder Certificate is issued to an individual who is eligible for him/herself or on behalf of a minor.

A Joint ‘A’ Certificate is issued to joint owners or two individuals who are eligible. The maturity amount in this case is paid to both holders of the account jointly or to the survivors.

A Joint ‘B’ Certificate, on the other hand, is issued to two individuals jointly. The maturity amount here is payable to any of the joint account holders or survivors.

Eligibility Criteria of Kisan Vikas Patra 

• The age of the applicant has to be 18 years and above
• The applicant should be an Indian citizen
• A KVP cannot be purchased by a minor. Eligible adults above 18 years can invest in this scheme on behalf of a minor. They can also invest in this scheme jointly
• A KVP certificate can also be purchased by a trustee
• However, NRIs or Non-Resident Indians as well as HUFs or Hindu Undivided Family cannot purchase certificate under this scheme

Kisan Vikas Patra (KVP) Interest Rate 2023

The KVP interest rate 2023 is 7.2% p.a. for the Q4 FY 2022-23, (quarter starting from 1 January 2023 to 31 March 2023) compounded on a yearly basis. However, as already mentioned, the KVP interest rate keeps changing as modified by the Finance Ministry of India on a quarterly basis. The investment under KVP is compounded annually. Here’s a KVP interest rate chart:

How KVP Interest Doubles? 

As discussed above, KVP is a low-risk investment scheme in India that is calculated on the basis of compounding interest. Here’s the formula for computing the interest.

A = P (1 + r/n) ^ (nt)

Here,

A stand for Maturity Amount

P stands for Principal

R stand for Rate of Interest

t stands for Investment Tenure, and

n – is the time in number during which the interest gets compounded during the tenure of the investment

For example, if you invest INR 1000, at 7.2 % current KVP interest rate, the amount will take 124 months to get doubled.

Benefits of Kisan Vikas Patra (KVP)

Here are some benefits of the plan:

• Assured Return on Savings – Since KVP is a government-backed plan, it assures high return on investment to the investor over a long time duration. The plan doesn’t get affected by the market fluctuations.
• Monetary Security – KVP being a plan that comes without any market risks can be termed as the safest scheme of savings. Hence, the investor under this scheme can be certain of getting a corpus when the scheme matures.
• Compounded Interest – The fact that KVP interest rate is annually compounded, it allows better returns on the savings.
• Tenure – At present, the tenure of KVP is 124 months during which interest continues to accrue over the corpus amount
• TDS Exemption – When the KVP certificate matures, no TDS or tax deducted at source is applied from the maturity amount. However, the tax benefit can change as per laws.
• Allows Loan Against the Scheme – Investors can use KVP certificates as collateral to avail a loan at a low interest rate.

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To Sum Up

KVP is an advantageous scheme for investors with extra funds. Being a risk-free plan, it suits the risk-averse individuals with suitable returns. Further, KVP interest rate calculator can be used to compute the maturity amount in case of any doubt by the investor.

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