Kisan Vikas Patra returns

The government will relaunch the Kisan Vikas Patra scheme on Tuesday , hoping to lure investors away from gold and fraudulent schemes by offering attractive terms. There won't be any upper limit on investments, the minimum denomination being Rs.1,000.
Investors will be able to double their money in 100 months but the government has bundled in a number of features to enhance liquidity of the instrument as the new regime looks to raise the level of financial savings that fell to 7.1% of GDP in FY13 from more than 12% in FY10.
“Kisan Vikas Patra was a popular instrument among small savers. I plan to reintroduce the instrument to encourage people...to invest in this instrument,“ FM Arun Jaitley had said in his budget speech in July . The government has already rolled out an ambitious scheme, Pradhan Mantri Jan Dhan Yojana, to ensure financial inclusion.So far nearly 8 crore accounts have been opened under the scheme. “The (KVP) scheme will safeguard small investors from fraudulent schemes,“ the finance ministry said in a statement.
The popular scheme had been closed in 2011.
“The re-launched KVP will be available to investors in denominations of Rs.1,000, Rs.5,000, Rs.10,000 and Rs.50,000, with no ceiling on investment,“ the statement said.
The certificates, which will be initially issued by post offices, can be bought in single and joint names and can be transferred from one person to another multiple times. Investors will also be able to transfer them from one post office to another, and later could be made available via nationalised banks as well.
Certificates can be used as collateral to avail of loans.As an additional liquidity feature, investors will also have an exit option after two years and six months, and every six months thereafter at a pre-determined exit value. There are no tax benefits as of now for investments in the scheme that will yield an annual rate of nearly 8.7%, more than most other small savings instruments.
“With a maturity period of eight years and four 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 central and state governments,“ the statement said.

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