Kisan Vikas Patra (KVP) is considered as one of the best small savings schemes for risk-averse investors which also falls under the nine small savings schemes offered by post office. The scheme states to double a one-time investment over a tenure of 124 months. Under this scheme, a farmer can make a minimum contribution of Rs.1000 to acquire a KVP certificate. Investments can only be made in multiples of Rs 1,000, and the investment has no upper limit. You'll need to submit your PAN details for any investment above Rs 50,000. But before purchasing a KVP certificate you need to consider some important facts that are covered below.
1. Returns and interest rate
Currently KVP is fetching 6.9% interest rate which is compounded yearly. In ten years and four months, the KVP guarantees to almost double your investments. Thus, if you spend a certain amount in the scheme, by the end of the 124 months you will be having almost double your contribution.
Unlike several other long-term investment initiatives, the KVP facilitates premature withdrawals to investors. However, you will have to pay a penalty and lose the interest in case you make a withdrawal within one year of purchasing the certificate. If you withdraw from the scheme between one year and two and a half your interest will be weakened but no penalty will be charged. It is allowed to withdraw any time after two and a half years, which does not face any penalty or interest loss.
An Indian resident except NRI having a minimum age of 18 years of age will be eligible to buy KVP certificate. Senior citizens are also allowed to invest in this scheme as the scheme has no upper age limit. A minor can also invest in the scheme but in case of a minor, the account must be maintained by an adult.
4. Investment threshold
KVP backed by the government of India is a low-risk saving strategy which allows investors to make a minimum and maximum investment limit of Rs 1,000 up to Rs 50,000. The scheme enables investors to purchase a certificate jointly, on behalf of a minor or individually. The applicable interest rate is not directly related to market uncertainties and may be determined periodically by the Finance Ministry.
At the time of issuance, the maturity value calculated according to the existing interest rate is pre-printed on your KVP certificate. Which ensures that even if the interest rate has changed at maturity, the adjustment will not affect your returns. Therefore, the KVP is widely known as one of the best and secure investment options for investors across India.