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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.
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.
Below are the various types of KVP certificates:
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.
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:
| Quarter | Financial Year (FY) 2021-22 | FY 2020-21 | FY 2019-20 | FY 2018-19 |
| Apr – Jun | 6.9% | 6.9% | 7.7% | 7.3% |
| Jul – Sep | 6.9% | 6.9% | 7.6% | 7.3% |
| Oct – Dec | 6.9% | 6.9% | 7.6% | 7.7% |
| Jan- Mar | 6.9% | 6.9% | 7.6% | 7.7% |
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.
Here are some benefits of the plan:
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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The interest rate on Kisan Vikas Patra (KVP) at present is computed at the rate of 7.2% (with effect from FY January 2023 to March 2023) on an annual basis for the entire term.
The KVP current interest rate in post offices is the same as that of banks, which is 7.2% at present.
The interest rates on several small savings schemes have been increased by the government in the fourth quarter of FY 2022-23 starting 1st Jan to 21st March, 2023
Both are considered safe options for financial planning and saving for the future. Both plans are better to ensure a security of finance KVP doesn’t offer any tax benefits.
PayBima Team
PayBima is an Indian insurance aggregator on a mission to make insurance simple for people. PayBima is the Digital arm of the already established and trusted Mahindra Insurance Brokers Ltd., a reputed name in the insurance broking industry with 17 years of experience. PayBima promises you the easy-to-access online platform to buy insurance policies, and also extend their unrelented assistance with all your policy related queries and services.
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