Kisan Vikas Patra (KVP) is a savings scheme (offered by the Government) that provides attractive interest rates and builds a culture of saving, particularly in rural areas. KVP offers competitive interest rates that can fluctuate throughout the year on a quarterly basis. Also, it is compounded annually. The investment matures after a fixed tenure, typically 115 months (9 years and 7 months).
Although KVP provides a steady return, it restricts access to your invested amount for the entire tenure. If you have unexpected situations where you might need immediate access to the funds, you can consider a Loan Against Kisan Vikas Patra. The loan is secured by your KVP certificate, making it a relatively less risky option for lenders.
You can avail a Loan Against Kisan Vikas Patra if you hold a valid KVP certificate in your name.
The interest rate on Loan Against Kisan Vikas Patra is lower than unsecured loan options due to the secured nature of the loan (KVP acts as collateral). However, the specific rate will depend on factors like the loan amount, tenure, and the bank's policies.
Table of Contents:
- ⇾ Loan Against Kisan Vikas Patra
- ⇾ Features of Loan Against Kisan Vikas Patra
- ⇾ List of Banks That Offer Loan Against KVP
- ⇾ Kisan Vikas Patra as Collateral
- ⇾ Documents Required For Loan Against KVP
- ⇾ Eligibility Criteria For Loan Against Kisan Vikas Patra
- ⇾ Steps To Apply For a Loan Against KVP
- ⇾ Frequently Asked Questions
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Features of Loan Against Kisan Vikas Patra
Loan against Kisan Vikas Patra allows certificate holders to access funds without the need to prematurely encash their KVP investment. This facility provides financial flexibility to investors helping them to meet immediate cash requirements while keeping their long-term savings intact.
Let's take a look at the features of a loan against Kisan Vikas Patra.
| Feature | Description |
|---|---|
| Loan-to-Value Ratio (LTV) | Up to 80-85% of the Kisan Vikas Patra's face value. |
| Purpose | Business or personal needs. |
| Interest Rate | Competitive interest rates (typically lower than unsecured loans). |
| Collateral | Kisan Vikas Patra certificate (pledged) |
| Maturity | As per the loan term |
| Benefit of KVP Interest | You continue to earn interest on the Kisan Vikas Patra while availing the loan |
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List of Banks That Offer Loan Against KVP
Various reputable banks recognize the value of KVP as collateral and offer loan services against these certificates. These banks have developed specific products and policies for KVP holders who need a loan.
The table below presents the list of reputable banks that offer loans against Kisan Vikas Patra.
| State Bank of India (SBI) | HDFC Bank |
| Bank of Baroda | Axis Bank |
| Punjab National Bank (PNB) | Canara Bank |
| ICICI Bank | Kotak Mahindra Bank |
Kisan Vikas Patra as Collateral
Kisan Vikas Patra (KVP) certificate can be used as collateral for a loan. Banks typically offer loans up to 80-85% of the face value of your KVP. The exact amount will depend on the bank's assessment and your creditworthiness.
Also, during the loan tenure, the original KVP certificate will be pledged to the bank. They will hold it until the loan is fully repaid.
Documents Required For Loan Against KVP
To get a loan against your Kisan Vikas Patra (KVP) certificate, you'll typically need to submit a specific set of documents.
- Original KVP Certificate: The bank will hold onto it until the loan is fully repaid.
- Form 4 - Application to Pledge KVP: This form needs to be filled out and submitted to initiate the pledging process.
- Acceptance Letter from Pledgee: The bank will typically provide you with a pre-filled acceptance letter that confirms they are willing to hold the KVP as security. You'll need to sign and return this letter.
- Income Proof: You will need to submit documents like salary slips or Income Tax Returns (ITR) to prove your income and ability to repay the loan.
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Eligibility Criteria For Loan Against Kisan Vikas Patra
To be eligible for a loan against Kisan Vikas Patra (KVP), here are the primary criteria:
- KVP Ownership: The KVP certificate must be in your name. You cannot take a loan against someone else's KVP.
- Residence: You must be an Indian resident.
- Minimum Age: You should be above 18 years of age.
- Purpose: The loan can be for business needs or personal expenses. Some banks may have restrictions on using the loan for speculative purposes.
- Credit Score: Banks prefer a good credit score to minimize the risk of defaults.
Steps to Apply For a Loan Against KVP
- Step 1: Apply for the loan against KVP at your preferred bank.
- Step 2: Along with the loan application, submit the original KVP certificate, completed Form 4, and the signed acceptance letter.
- Step 3: The bank will verify the KVP certificate and your eligibility for the loan based on your creditworthiness and income.
- Step 4: If your loan is approved, the bank will process the loan and disburse the funds.
- Step 5: The original KVP certificate will be marked as "pledged" and held by the bank until the loan is fully repaid.
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Frequently Asked Questions
Yes, you can take a loan against your Kisan Vikas Patra (KVP) certificate up to 80% of the KVP's value.
Many banks in India offer loans against Kisan Vikas Patra (KVP), including SBI, Bank of Baroda, and Indian Bank. These loans typically allow you to borrow up to 80-85% of the KVP's face value.
You can get a loan against your KVP certificate by pledging it as collateral at a bank. The bank will offer you up to 80% of the KVP's value as a loan and you will need to submit documents like income proof and the original KVP certificate.
To get a loan against KVP, you will need the original KVP certificate, a completed KVP pledge application form, and income proof like pay slips or ITR documents. The KVP certificate will be pledged as collateral for the loan.
You can get a loan against your Kisan Vikas Patra (KVP) for up to 80-85% of its face value. This loan option is available from banks and works because the KVP acts as collateral for the loan.
The interest rate for a loan against KVP varies depending on the bank, but it typically starts around 7.5% per annum and can be higher.
Yes, there is a processing fee for availing a loan against KVP. It varies depending on the bank, but it typically ranges from Rs. 500 to Rs. 3,000.
The repayment period for a loan against KVP typically is not longer than 5 years or the maturity date of the KVP, whichever comes first. Some banks may offer a slightly longer repayment period, but it won't exceed 6 years.
No, you cannot earn interest on KVP if you take a loan against it. Kisan Vikas Patra (KVP) is a savings scheme, not a loan. You can only redeem your KVP to access the funds, which stops future interest accrual.
Defaulting on a loan against your KVP can hurt your credit score and lead the bank to encash your KVP to recover the loan amount.
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