FM to relaunch Kisan Vikas Patra tomorrow

Finance minister Arun Jaitley will re-launch the Kisan Vikas Patra (KVP) tomorrow, which will be available to investors in the denomination of Rs1,000, Rs5,000, 10,000 and Rs50,000, with no upper ceiling on investment. KVP investments will double in 100 months.

KYC norms are applicable for buying Kisan Vikas Patra as in the case of National Savings Schemes (NSS), which is sold through post offices and banks with effect from January 2012. 

Increasing savings rate in the economy was one of the priorities of the new government, which decided to revitalize the small savings instrument Kisan Vikas Patra (KVP), which has been popular among investors.

''Kisan Vikas Patra (KVP) a very popular instrument among small savers will be reintroduced the instrument will encourage people, who may have banked and unbanked savings to invest,'' the finance minister had announced in his budget speech.

Accordingly, it has been decided to reintroduce Kisan Vikas Patras (KVPs).

The certificates can be issued in single or joint names and can be transferred from one person to any other person / persons, multiple times. The facility of transfer from one post office to another anywhere in India and of nomination will also be available.

The certificate can also be pledged as security to avail loans from the banks and in other case where security is required to be deposited.

Initially the certificates will be sold through post offices, but it will soon be made available to the investing public through designated branches of nationalised banks.

Kisan Vikas Patras have unique liquidity feature, where an investor can, if he so desires, encash his certificates after the lock-in period of 2 years and 6 months and thereafter in any block of six months on pre-determined maturity value. The investment made in the certificate will double in 100 months.

Reintroduction of Kisan Vikas Patra (KVP) is a welcome step not only in the direction of providing safe and secure investment avenues to the small investors but will also help in augmenting the savings rate in the country. The scheme will also safeguard small investors from fraudulent schemes. With a maturity period of 8 years 4 months, the collections under the scheme will be available with the government for a fairly long period to be utilised in financing developmental plans of the centre and state governments and will also help in enhancing domestic household financial savings in the country.

Kisan Vikas Patra was launched by the government on 1 April 1988. The scheme provided facility of unlimited investment by way of purchase of certificates from post offices in various denominations. The maturity period of the scheme when launched was 5- years and the money invested doubled on maturity. The scheme was very popular among the investors and the percentage share of gross collections secured in KVP was in the range of 9 per cent to 29 per cent against the total collections received under all National Savings Schemes in the country. Gross collections under the scheme in the year 2010-11 were Rs21,631.16 crore, which was 9 per cent of the total gross collections during the year. In the year of its closure, the scheme secured gross collections of Rs7,575.95 crore (April 2011 to November 2011).