NSC vs KVP

The National Saving Certificate and the Kisan Vikas Patra are government-backed saving instruments. How are they different from each other and which is better for you?

What is a National Savings Certificate (NSC)?

NSC stands for National Saving Certificate, which is a small savings scheme started by the Government of India. These accounts can be opened at any Post Office across the country. 

The main beneficiaries are expected to be people from low to medium-income households. It helps build a habit of disciplined saving all the while saving on taxes. Multiple accounts can be opened by an individual. 

The following are the salient features of the savings scheme - 

• A minimum deposit of Rs.1,000 can be made

• Any amount in multiples of Rs.100 can be invested after the minimum amount

• There is no maximum limit to the amount that can be invested

What is the KVP?

KVP stands for Kisan Vikas Patra, and it is also a government-backed savings instrument. This scheme was re-launched in 2014 with new rules. A PAN card would be mandatory for investments above Rs.50,000 and proof of income source would be necessary for investments above Rs.10,00,000. 

Some of its salient features are - 

• A minimum of Rs.1,000 can be made

• Any amount in multiples of Rs.100 can be invested after the minimum amount

• There is no maximum limit to the amount that can be invested

What are the major differences between NSC vs KVP?

NSC vs KVP - Detailed Comparison

Here is a detailed comparison between NSC and KVP which will help you decide which is a better option for you -

Eligibility and Account Opening

NSC and KVP can be opened by an adult for themselves or on behalf of a minor. A minor above the age of 10 can also open an account for themselves.

Only individual resident Indians can open NSC accounts, trusts are not eligible for this scheme. Whereas, even trusts can open an account under the KVP. When it comes to HUFs and NRIs, they are not eligible for either NSC or KVP.

NSC accounts can be opened in any Post Office across the country, while KVP accounts can be opened in banks as well as Post Offices.

Types of Accounts

The types of accounts are not very different when it comes to NSC vs KVP. Under both schemes, single-holder accounts can be opened by an adult for themselves or on behalf of a minor. A minor who is above the age of 10 can also open a single-holder account for themselves.

Joint accounts can be of two types, and both can be opened by up to three adults. For the Joint ‘A’ Type accounts, the amount is payable to both account holders jointly or to the survivor. In the case of Joint ‘B’ Type accounts, the amount is payable to either of the survivors. 

Tenure and Withdrawals

NSC has an investment tenure of 5 years, while the tenure of KVP varies depending on the Ministry of Finance.

While KVP accounts can be encashed after 2.5 years of account opening, NSC doesn’t allow any premature withdrawals. However, both NSC and KVP allow you to pledge the amount to a bank and apply for a loan.

Account Transfer

Both NSC and KVP accounts can be transferred from one person to another in certain circumstances. They are - 

• The death of an account holder in the case of a single-holder account or a joint account

• By order of the court

• The pledging of account closure by relevant authorities, such as the Reserve Bank of India (RBI), scheduled banks, housing financial firms, local authorities, and others

Conclusion

The government of India has started many schemes for saving for your retirement. The National Savings Certificate and Kisan Vikas Patra are two such safe schemes that have almost zero to low risk involved. 

You can open accounts under these schemes from any post office or bank in India. The returns are also decided by the government which promises sure and safe returns. The National Savings Certificate is the right choice for you if you are willing to lock your funds for 5 years, and also want to save some taxes. 

The Kisan Vikas Patra might be a better choice for you if you want higher liquidity, as you can withdraw your funds after 2.5 years of opening the account. This is a good option if you have already maximized your tax benefits, as the KVP does not offer any tax benefits. The KVP also has higher returns as compared to the NSC.

Apart from this, it depends on your personal preference which you choose. In case you need urgent funds, you can always opt for moneyview instant personal loans. Here you can get loans up to Rs.10 Lakh with minimal documentation. To know more, visit our website or download the moneyview app.