Even though investments in the re-launched Kisan Vikas Patra (KVP) can be made without quoting PAN card numbers, these certificates cannot be bought in cash, an official Finance Ministry source has clarified.
Matured KVPs will be enchashable only through cheques, which will make the investments trackable, the source said when contacted by The Hindu . Returns on KVPs will be taxable. The certificates will carry a lock-in period of 2 years and 6 months after which they will become encashable on pre-determined maturity value. Investments made in the certificate will double in 8 years 4 months.
The official source was responding to questions asked by Congress leader and former Union Finance Minister P Chidambaram, who had expressed suspicions about the real reasons for the Modi Government’s decision to re-launch the KVP.
“The ostensible purpose is to promote savings. The argument is suspect because there are other fixed-income instruments which offer better returns,” Mr. Chidambaram said. He said he was prepared to reserve judgement on KVP until the Government answers his specific questions.
Mr. Chidamabram asked if KVPs can be bought in cash without quoting PAN card numbers and without standard Know Your Customer (KYC) norms. He also questioned: “Will a KVP be freely transferable without any limit on the number of transfers? If so, what is the use of applying KYC to the first purchaser?”
In response to Mr. Chidambaram’s questions, the source said standard KYC norms would apply to KVPs. “KYC norms applicable to all small savings schemes will apply to KVPs too,” he said. Allaying fears on the decision to allow unlimited number of transfers of KVPs, he said: “The payments will be made through cheque any further transaction of that money can be tracked”.
