The KVP has been relaunched and I think that is great news. No I will not be an investor – I prefer the bank bonds or even better the mutual funds that allow me to defer the income far longer.

However, I have interacted with many poor people who do not like to deal with banks. They genuinely prefer the post offices for their dealings. One also needs to remember that SBI has about 13,000 branches, and the post office has, hold your breath, more than 30 TIMES THAT FIGURE. Needless to say the reach of the PO will ensure that lots of money – my estimate is about Rs. 10,000 crores at least to start with will be collected by KVP.

This money would have otherwise stayed at home, spent, converted to gold or worse gone to scamsters of West Bengal. The Sardha scam is just the tip of the iceberg – there are much worse scams in WB.

Now come to the usefulness of this instrument even for the middle class. It is supposed to be available in demat form and can be traded. If this is true, it will be an awesome instrument. If I have need for money at the end of 1022 days, I will be able to buy an instrument maturing EXACTLY on that date. No other instrument is now available with such ease. This means I need to be in expensive liquid funds EVEN THOUGH I KNOW the exact date of my money requirement.

Many people are saying the PAN requirement being waived is bad. Honestly in a bearer document, PAN makes no sense, gimme a break.  I can always ask my driver, peons, maid, friends, etc. to buy on my behalf. To think that this instrument will be used to park black money seems to be funny. Be that as it may, at least the money is coming to the government. And let me tell you that the LIC policies as a black money hiding place is far, far, far greater than kvp can ever be.

I think it is a nice step for the rural poor, and for those people who are afraid of the banksters. One smart bank kid was so disturbed by her boss’s pressure to convert a client to ULIPs that she broke up his Rs. 3 million deposits into many small deposits so that the system does not keep throwing up the name as a ‘target’…


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  1. In my opinion, KVP is invaluable to rural investors. And even if black money is invested in KVPs, so what? It is probably being put to good use by the government instead of hiding under a mattress.

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