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Earlier, KVP account holders were hoping for a further hike in the interest rate. However, another hike was unlikely as the KVP interest rate was revised in the last quarter. In the April-June quarter of FY 2023-24, the Kisan Vikas Patra interest rate was increased to 7.5%.
KVP allows investors to deposit any amount in their accounts, starting from Rs 1000 and thereafter in multiples of Rs 100. With KVP, depositors can currently double their invested amount in 115 months (9 years and 7 months). The KVP interest rate is compounded annually.
This year, the Government has increased interest rates for several small savings schemes such as Senior Citizen Savings Scheme (SCSS), National Savings Certificate (NSC), Sukanya Samriddhi Yojana (SSY) account, Kisan Vikas Patra (KVP), and Post Office deposit schemes like Post Office Time Deposit, Post Office Monthly Income Scheme (POMIS) and Post Office Recurring Deposit (RD). However, the Public Provident Fund (PPF) interest rate has remained unchanged.
As RBI has paused the repo rate hike and inflation seems to be in control, experts believed there was very little possibility of a further hike in the KVP account interest rate today.
The interest rates of small savings schemes, including Kisan Vikas Patra, are linked to yields of Government Securities (G-Secs). The Finance Ministry reviews the interest rates of small savings schemes like KVP every quarter of a financial year. The review is done on the basis G-Secs yields of the previous three months.
The interest rates offered by the Government on most of the small savings schemes, including Kisan Vikas Patra is currently at par with Fixed Deposit rates offered by banks. The current KVP interest is the same as the 10-year Fixed Deposit interest rate offered by SBI.
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