"In the last 2-3 years, savings rate in country has declined from a record high of 36.8 per cent to below 30 per cent due to slowdown in the economy. It is, therefore, necessary to encourage people to save more," Finance Minister Arun Jaitley said during the launch of the revamped KVP.
KVP would serve two purposes, he said, adding, one it would help poor gullible investors to channelise their savings towards trusted government scheme instead of some ponzi schemes, where hard earned savings disappears.
"Secondly, there is an urgent need to raise savings in the country...these savings are then used for nation building. Such saving instrument not only earn interest but help in development of the country," he said.
Talking about the features of the instrument, the Finance Minister said this simple product would be a bearer instrument without name of the holder in the first phase.
Available in the denomination of Rs 1,000, 5,000, 10,000 and 50,000, the amount invested in KVP would be doubled in 100 months.
KVP, that has got no upper ceiling for investment, can be encashed after a lock-in period of 30 months.
Initially, the certificates will be sold through post offices, but the same will soon be made available to the investing public through designated branches of nationalised banks, Jaitley said.
However, savers would not get any tax benefit for their investment in KVP.