Kisan Vikas Patra: Want to transfer, pledge or prematurely close your account? Here’s what the rules say…
A post office investment scheme, the Kisan Vikas Patra (KVP) is a 115-month (9 years and seven months) investment, where you can deposit a lump sum amount to double over the full tenure.
Started in 1988 as an initiative to help farmers save for the long term, KVP is now available to all Indian citizens above the age of 10 years.
Kisan Vikas Patra: Key highlights
For minors (below 18 years of age) an adult can open the account and then transfer the same once they attain major age. The scheme has a minimum start investment of ₹1,000, with no upper cap.
All deposits require Aadhaar as proof of identity; and since 2014, investments above ₹50,000 require PAN Card proof, while for deposits of ₹10 lakh and more investors must also show income proof.
A low-risk small savings certificate guaranteed by India Post, KVP offers interest rate of 7.5% for this quarter. The money invested doubles on maturity and interest earned is taxable. There is no deduction under Section 80C, but the account can be transferred to another user and can have up to three joint holders. Further, TDS is deducted at 10% every year on the interest credited.
How to prematurely close KVP account?
According to the official website, the account may be closed prematurely at any time before maturity under the following circumstances:
In case of premature closure of account, the account holder or nominee will receive the principal amount along with simple interest calculated at the rate applicable from time to time to Post Office Savings Account for the complete months for which the account has been held.
Also, for accounts closed any time after two years and six months from the date of opening, the amount, inclusive of interest shall be payable.
In the event of death of the depositor of a single account or of all the depositors in a joint account, the deposit shall be payable to the nominee if a nomination exists or to the legal heir(s).
When can a KVP account be pledged?
According to the website, your KVP account may be pledged or transferred as security, by submitting prescribed application form at concerned Post Office supported with acceptance letter from the pledgee.
Transfer/pledging may be made to the following:
- The President of India / Governor of a State
- RBI / Scheduled Bank / Co-operative Society / Co-operative Bank
- Corporation (public / private) / Govt. Company / Local Authority
- Housing finance company approved by National Housing Bank and notified by Central Government.
When is account transfer allowed?
An account may be transferred from one individual to another, subject to the condition that the transferee is eligible to open an account under this Scheme, the website noted. This is allowed only in following conditions:
- On the death of account holder(s) to nominee/legal heirs,
- On the death of any of account holders in joint account to surviving holder(s),
- On the order of the court,
- On pledging of account.
Disclaimer: This story is for educational purposes only. We advise investors to check with certified experts before making any investment decisions.
