Kisan Vikas Patra vs National Savings Certificate vs Bank FD: Choosing the Right Option

For generations, Indians have valued saving as much as earning. From Kisan Vikas Patra to the National Savings Certificate, every household had its own trusted way to grow money safely. These schemes earned faith at a time when security mattered more than speed.

Today’s investors want their money to be just as safe, yet easily accessible whenever life calls for it. That’s where Fixed Deposits (FDs) step in. They blend the trust and stability of traditional saving with modern convenience, from instant online account opening to hassle-free withdrawals — all while ensuring steady, guaranteed returns.

This article explains how each option works, how they differ, and which one might suit your savings goal best.

What Is Kisan Vikas Patra (KVP)? 

Kisan Vikas Patra (KVP) was designed for a different time, when savings were meant to be untouched for years.

When you invest in KVP, you get a certificate that shows how much you invested and when it will double. At the current rate of about 7.5% per year, your money doubles in roughly 115 months (that’s about 9 years and 7 months).

• Minimum investment: ₹1,000 (no upper limit)
• Lock-in period: You can’t withdraw before 2 years and 6 months, except under special cases
• Tax benefit: No Section 80C deduction; interest you earn is taxable
• Safety: Fully backed by the Government of India

But that same long horizon can be its limitation today. For someone saving with shorter financial goals in mind — say, a child’s education, or buying a car — waiting nearly a decade can feel restrictive.

That’s why many modern savers prefer FDs. FDs today offer comparable returns with flexible tenures and early-withdrawal options, making them more suited to today’s lifestyle.

What Makes the National Savings Certificate (NSC) Popular?

National Savings Certificate (NSC) is a Government-backed investment instrument that’s been around for decades. You can buy it from any post office. The scheme currently offers around 7.7% interest (this rate changes slightly, depending on government reviews).

NSCs come with a lock-in period of 5 years. While it provides a tax deduction under Section 80C, consider the lock-in period before depositing your money.

• Tenure: 5 years
• Lock-in: No early withdrawal except in very rare cases (death or court order)
• Tax benefit: Yes, under Section 80C — up to ₹1.5 lakh a year
• Safety: Guaranteed by the Government of India

FDs, on the other hand, let you plan on your own terms — choose tenure, break early with minimal penalty (allowed only for callable FDs, early withdrawals may cause loss of earnings), and still enjoy steady, predictable growth.

How Do Bank Fixed Deposits (FDs) Compare?

Fixed Deposits offer safe and assured returns. You deposit a lump sum for a particular tenure, which could be as short as 7 days or as long as 10 years, and you earn a fixed interest rate for that period.

Today’s FDs have evolved far beyond paper slips and branch visits. You can open an FD online in minutes, renew automatically, and earn high interest rates— even higher for senior citizens.

• Tax benefit: Regular FDs don’t give tax benefits, but tax-saving FDs (with 5-year lock-in) qualify under Section 80C
• Liquidity: You can usually break your FD before maturity by paying a small penalty. Ujjivan does not charge any penalty for withdrawals made after 6 months from the time of deposit.
• Safety: Deposits up to ₹5 lakh per bank are insured by DICGC (Deposit Insurance and Credit Guarantee Corporation)

Bank FDs suit people who want flexibility, steady returns, and the option to withdraw early if they ever need the money. Whether you want short-term liquidity or long-term stability, an FD adjusts to your goals without compromise.

FDs Vs Other Traditional Savings Options

Let’s look at how KVP, NSC, and Bank FDs differ in key areas like interest rate, tenure, and flexibility.