Kisan Vikas Patra: How interest rate change affects existing and new KVP account holders

A change in the Kisan Vikas Patra (KVP) interest rate does not affect the existing deposits under the scheme. However, new accounts are affected based on whether the interest rate has been increased or decreased.

As the Finance Ministry is expected to announce the Kisan Vikas Patra (KVP) interest rate for the October-December quarter of FY 2025-26 on Wednesday, September 30, 2025, here's a look at how a change in interest rate affects KVP account holders.

How does the KVP interest rate work?

The Finance Ministry declares the Kisan Vikas Patra interest rate every quarter. The scheme is popular for safely doubling investor's money during the investment period. Typically, the maturity period of the scheme depends on the time taken to double the investment at a given interest rate.

Currently, KVP is offering 7.5 % interest, which is compounded yearly. The amount invested in a KVP account doubles in 115 months (9 years and 7 months) at this rate. Therefore, the current maturity period for deposits under this scheme is 9 years and 7 months.

The Kisan Vikas Patra Scheme, 2019 says the following about interest payment:

"Deposits made in the account shall double on maturity... The maturity period of the deposit under this Scheme shall be determined on the rate of interest applicable at the time of opening the account."

Impact of KVP interest rate hike or cut

Like SCSS and Post Office Time deposit, interest rate changes in KVP apply only to new accounts opened during the quarter in which the revised rate is announced.

This means:

⦁ If the finance ministry increases the KVP interest rate, only new investors (or fresh deposits after account maturity/extension) will benefit from the higher rate.

⦁ Existing KVP account holders continue to earn the interest rate that was in effect when they opened or extended their account.

So, if an individual has currently invested in KVP at 7.5%, a later rate cut will not affect his/her returns. Similarly, an increase in interest rate will also not have any effect on an existing KVP account holder.

If the Finance Ministry revises the Kisan Vikas Patra interest rate, then the new rate will apply only to new deposit accounts.

For an individual account holder, the KVP interest rate is fixed for the entire tenure once you invest. This is different from schemes like PPF and SSY where the interest rate can change even before maturity. So, any rate hike or cut only affects new investments or renewals made after the rate change, not the existing KVP accounts.

More about the impact of interest rate changes on other small savings schemes:

What this means for you

• If you invest ₹1 lakh in KVP today at 7.5%, your investment will double in 9 years and 7 months. The time taken to double the investment will not change even if the government increases or lowers the rate during that period.

• However, if the government announces a rate hike, only new deposits will get the higher interest rate.

• Similarly, if the interest rate drops, existing KVP accounts won’t be affected until maturity or renewal.

Ahead of the small savings scheme interest rate announcement, KVP account holders may be expecting a hike in the interest rate. However, nothing can be confirmed at this time. Moreover, any hike or cut will not have any effect on their existing investments under the scheme.