Seeking to revitalise small savings among low-income groups, finance minister Arun Jaitley re-launched the Kisan Vikas Patra (KVP) investment scheme on Monday.
KVP’s objective is to raise savings, especially among the poor, through a trusted instrument that will keep them off ponzi schemes, the finance minister said.
“In the past two-to-three years, savings rate in the country has declined from a record high of 36.8 per cent to below 30 per cent due to slowdown in the economy. It is, therefore, necessary to encourage people to save more,” Jaitley said while re-launching KVP.
Jaitley said schemes such as KVP would channelise the savings of gullible investors away from fly-by-night operators who cheat people of their hard-earned money.
“Whenever we put our savings in such savings schemes (as KVP), these get linked to the development schemes of the country. Because that money does not stay in post office or bank accounts, it gets utilised in development work,” he said.
“In any developing society, there is a need to increase savings. When our economic growth had slowed down, savings rate was around 20 per cent. There is an urgent need to raise savings in the country,” he noted.
Telecom minister Ravi Shankar Prasad, who was also present at the event, said: “KVP was a popular instrument for small savings and it had an emotional connect with the people of the country.”
He also spoke of the postal department’s seven small savings schemes and said there are currently around three million account holders with an outstanding of around Rs 6-lakh crore.
KVP, which was launched on April 1, 1988 and discontinued in November 2011, was preferred by popular among small savers and the percentage share of gross collections secured in KVP was 9-29 per cent out of the total collections received under all national savings schemes in the country.
The re-launched KVP will be available to the investors in the denomination of Rs 1,000, Rs 5,000, Rs 10,000 and Rs 50,000 with no upper ceiling on investment.
The certificates can be issued in single or joint names and transferred from one person to any other person / persons multiple times. The facility of transfer from one post office to another anywhere in India will also be available. The certificate can also be pledged as security to avail loans from the banks and also in cases where security is required to be deposited.
Initially, the certificates will be sold through post offices, but the same will soon be made available to the investing public through designated branches of nationalised banks. The initial lock-in period for investors will be two-and-a-half years. Jaitley said the investment made in the certificate will double in 100 months.