Kisan Vikas Patra: When Safety Matters More Than High Returns
Kisan Vikas Patra (KVP) is a government backed savings scheme in India offering return of 7.5% annually.
May 2026
3 mins read
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If you are looking for safer ways to save money and double your investment, Kisan Vikas Patra may be a good fit. Kisan Vikas Patra is a government-backed small savings scheme that offers safety of capital and certainty of returns. It offers a clearly defined outcome: the invested amount doubles over a fixed period, making it suitable for long-term, goal-based investing where predictability matters.
From April 2023, the government has set its interest rate at 7.5% annually. At 7.5%, your investment, would double in 9.5 years or 115 months. The interest rate applicable at the time of investment determines the final doubling period and remains locked for the entire tenure. This structure protects investors from future interest rate fluctuations and provides clarity on returns from day one. Maturity period of an account opened on or after April 1, 2020 is ten years and four month.
Minimum investment
The scheme is highly flexible in terms of investment size. The minimum investment starts at Rs 1,000, with additional investments allowed in multiples of Rs 100. You cannot do multiple investments like SIP in the same account like a mutual fund. If you wish to make additional investment, you have to purchase another certificate. There is no limit on the number of accounts you can hold. This allows you to deploy surplus funds gradually or structure investments across different timeframes.
From a risk standpoint, KVP carries sovereign backing, making it one of the safest fixed-income options available. It suits conservative investors, retirees, or anyone looking to balance a portfolio dominated by market-linked assets with a stable, guaranteed-return product.
Mode of holding
A single holder Kisan Vikas Patra account can be opened by an adult in their own name or on behalf of a minor. A minor can also open a single holder account independently once they attain the age of 10 years. Joint accounts are allowed in two formats: Joint ‘A’ type, which can be opened by up to three adults and is payable to all account holders jointly or to the survivor, and Joint ‘B’ type, which can also be opened by up to three adults and is payable to any one of the holders or the survivor.
KVP accounts can be opened at post offices and authorised banks.
Exit
Liquidity, however, is limited. Premature closure is generally not allowed before two and a half years, except under specific circumstances such as death of the account holder or a court order. After the lock-in period of two and a half years, early closure is permitted, but the payout follows predefined values that are meaningfully lower than the maturity amount. As a result, the scheme is best approached with a hold-to-maturity mindset rather than as a short-term savings option.
Taxation
From a tax perspective, KVP does not offer any deduction on the amount invested. The interest earned is fully taxable according to the investor’s income tax slab, although no tax is deducted at source. This makes post-tax returns less attractive for investors in higher tax brackets, despite the certainty of nominal returns.
An additional advantage of KVP is its ability to be pledged as security. The account can be used as collateral for loans from banks, cooperative institutions, or other approved entities, adding functional value beyond simple savings.
In summary, Kisan Vikas Patra is not designed for rapid wealth creation. Its strength lies in capital protection, guaranteed growth, and predictability. It fits well in the stable portion of an investment portfolio, particularly for long-term investors who value certainty and government assurance over liquidity, tax efficiency, or market-linked upside.
(Source: National Savings Institute)
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All the Mutual Fund investors have to go through a one-time KYC (Know Your Customers) process. Investor should deal only with the Registered Mutual Funds (RMF). For more info on KYC, RMF and procedure to lodge/redress any complaints, visit https://www.pgimindia.com/mutual-funds/ieid.
MUTUAL FUND INVESTMENTS ARE SUBJECT TO MARKET RISKS, READ ALL SCHEME RELATED DOCUMENTS CAREFULLY. Read more
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