Finance Minister Arun Jaitley on Tuesday resurrected the popular Kisan Vikas Patra (KVP) scheme in a bid to boost small savings and hike savings rate. Coming in the wake of the infamous Saradha scam, which has had many gullible investors fall prey to it, the Kisan Vikas Patra is aimed at helping investors channelise their savings in trusted government schemes instead of some obscure ponzi schemes.
Kisan Vikas Patra (KVP) used to be a very popular savings instrument among small savers. Gross collections under the scheme in the year 2010-11 were Rs. 21,631.16 crore but the scheme was discontinued in November 2011.
Under the new scheme, the invested money in Kisan Vikas Patras will double in 100 months, giving a return of around 8.7 per cent annum. Available in the denomination of Rs. 1,000, 5,000, 10,000 and 50,000, the amount invested in KVP would be doubled in 100 months. KVP, which has no upper ceiling for investment, can be encashed after a lock-in period of 30 months.
There will be no KYC but interest payment would face TDS (tax deducted at source).
The government is reintroducing it this year with the aim of bringing the savings of farmers into the formal channels. “Kisan Vikas Patra was a very popular instrument among small savers. I plan to reintroduce the instrument to encourage people, who may have banked and unbanked savings, to invest in this instrument,” Finance Minister Arun Jaitley said in his budget speech.
The earlier UPA government had discontinued issuance of KVP from December 1, 2011 following the recommendations of the Shyamala Gopinath committee, which was set up to review small savings schemes.