What is a Guaranteed Investment Certificate (GIC) in Canada?

One of the most essential prerequisites for studying in Canada is the proof of sufficient funds to cover your entire cost of living. For this, international students need to purchase a Guaranteed Investment Certificate (GIC). GIC Canada, also known as the Guaranteed Investment Certificate is a secure investment for a fixed period with a guaranteed rate of return. GIC is mandatory for all international students in order to get a student visa under the SDS program. According to the IRCC, the set GIC Canada amount is CAD 29,635. In this guide you will find all the important information related to GIC or the Guaranteed Investment Certificate, how you can purchase it, eligibility criteria and much more.

Understanding the Canadian GIC for International Students

As discussed earlier, GIC, or Guaranteed Investment Certificate is a financial service offered by Canadian financial institutions that act as proof of funds for international students studying in Canada. It is stated that as per the Canadian government’s regulations, all international students need to show evidence of sufficient funds to cover their living expenses during their first year of stay in Canada. 

Through this requirement, the student ensures the government that they can support themselves financially throughout their stay and will not become a burden on public resources. 

All international students need to deposit a specific amount into their GIC account to prove their financial stability.

Types of GICs for Indian Students

Now that we know what a Canadian GIC is. Let us dive into the three types of GIC that Indian students must be aware of. 

1. Non-Cashable GIC: This GIC is ideal for students who can easily lock in their funds for a specific period. One benefit of doing so is that it offers high interest rates and both the principal amount and interest earned are not refundable until the maturity date.

2. Cashable GIC: This GIC is similar to that of a non-cashable GIC but in this, the student is offered flexibility. Unlike non-cashable GICs, here students can easily withdraw their funds. However, there is a limit on how much one can withdraw every month. 
3. Equity-linked GIC or market-growth GIC: In this type of og GIC, returns are offered based on the market performance. These GICs guarantee a minimum return on the principal amount along with a potential bonus depending on the market performance.

Also Read: Difference Between SDS and Non SDS Visa Application

How to Purchase a GIC for Study in Canada?

Opening a GIC account in Canada is easy and requires very few steps for the students to follow. Let us look at all the steps in detail.

1. Choose an appropriate authorised financial institution: This is one of the most crucial steps as you must make a wise decision of selecting a financial institution that offers GIC accounts for international students. After selecting, ensure that the institution is authorised by the Canadian government and recognised by designated learning institutions (DLIs) in Canada.

2. Submit the GIC program application: Upon choosing the financial institution, you will have to apply for the GIC program online. In this step, you will also be required to upload documents such as a copy of your passport, proof of funds and admission letter from your DLI.

3. Submit Fees to the financial institution.
4. Once all the steps are done, you will receive an Investment Balance Confirmation and a Certificate of Investment. These documents serve as proof of funds in your study permit application.

GIC Canada Amount for International Students

After you have submitted your application, you will be required to submit the minimum deposit which is CAD 29,635. Additionally, there might also be a processing fee which could range from CAD 150 to CAD 200. 

Eligibility Criteria for GIC in Canada

The eligibility criteria for a Guaranteed Investment Certificate (GIC) in Canada depends on the type of GIC. To be eligible for a GIC Canada, the candidate must ensure that they check the following criteria:

1. Be at least 18 years old.
2. The student must be enrolled on a Canadian post-secondary institution.

Language Requirements

Before applying for a GIC, the student must ensure that they check out the language necessities as an Indian student, which are as follows:

1. Proficiency in the English language
2. IELTS with a score of 6.0 or above
3. Must have an acceptance letter from a Designated Learning Institution (DLI) in Canada

Documents Required for GIC Canada

Here are some other important documents which the student will be required to get GIC Canada:

1. Copy of Student’s Passport
2. Pan Card
3. Acceptance letter from the University
4. Proof of enrollment or admission
5. Proof of Financial Support
6. Medical Clearance Certificate

Non-Redeemable GIC Account

A non-redeemable GIC account refers to an account where international students can invest a certain sum of money for a particular time and benefit from a fixed rate of interest. After the validity period expires, students can take the remaining amount of GIC along with the applicable interest for the same period.

Is GIC Refundable?

No. GICs are non-refundable. The funds must be left in the GIC for the specified period before processing the withdrawal.  However, the GIC refund policy in Canada allows the person a refund within 14 days of application. In such circumstances, the bank will deduct CAD$ 15 from the processing fee

Also Read: How to Get Canada Student Permit?

Prominent Banks Offering GIC Canada for International Students

Students have to file to open a GIC account at least a month before they apply for the visa. There are three major Canadian-based lenders which allow candidates to open a GIC Canada account. 

• Scotiabank, Canada
• SBI, Canada
• The ICICI Bank, Canada

Banks	Scotiabank, Canada	SBI, Canada	ICICI Bank, Canada
Registration Mode	Online	Online	Online
GIC + Processing Fee	$10,200 CAD (INR 6.07 lacs)	$10,150 CAD (INR 6.04 lacs) $10,100 CAD (SBI India) (INR 6.01 lacs)	$10,150 CAD  (INR 6.04 lacs)
Name of the Confirmation Document	Investment Directions  Confirmation	Investment Declaration Advice	Investment Balance Confirmation
GIC Amount Transfer Mode	Wire Transfer	Wire Transfer	Wire Transfer
GIC Refund Processing Fee	Disclosed at the time refund	$25 CAD (INR 1489)	$10 CAD (INR 595)
GIC Redeem Period	Minimum 12 Months (Can be extended)	12th Months	12 Months
Monthly Interest on GIC Amount	Depends on the chosen program	1.15%	1.0%(p.a)

Also Read: Jobs with Work Permit in Canada

Registration Process of Scotiabank Canada 

Scotiabank is one of the superior banks in Canada and is considered the best international student choice for a Canadian GIC account. The Scotiabank Student GIC program for international students wishing to study in Canada involves the following process.

• Register yourself with Scotiabank through an online medium. 
• Deposit GIC of $10,000 CAD (INR 5.95 lacs) and $200 CAD (INR 12K) as a processing fee if you plan to choose Scotiabank services. 
• After successful registration, you will receive the login details such as account number and wire transfer details. 
• Scotiabank will send you a confirmation letter named “Investment Directions Confirmation”.
• Candidates have to submit the letter to the embassy at the time of visa application.
• Scotiabank will deposit $8,000 CAD (INR 4.76 lacs) out of $10,000 CAD (INR 5.95 lacs) into a non-redeemable account. International students can further withdraw a fixed amount on a monthly basis to support their daily expenses. 

Here are the documents you are required to submit at the time of the registration process: 

• Investment directions confirmation letter
• Valid passport
• Letter of enrolment from the previous university
• Study permit and offer letter

Enlisted are the documents of refund of the GIC account from Scotiabank:

• Scotiabank Investment account number
• A letter stating the reason for opening a GIC account
• Original case number
• Wire return bank details

Also Read: Canada Student Visa IELTS Band Requirements

Registration Process of SBI Bank Canada

The basic process remains the same, however, the Canadian GIC process offered by SBI is relatively a new concept to international students. 

• Create an SBI GIC account and log in. 
• To complete the registration process further, candidates need to upload a copy of their passport ID page and a copy of their academic transcripts. 
• Before scanning and uploading them, sign them and mention the current date. 

Below are the documents required: 

• Original passport
• A copy of the Investment Declaration Advice
• Letter of enrolment 
• Study permit 

In case of a refund, SBI will refund the entire amount from the SBI GIC account under any of the circumstances mentioned in the paragraph. 

Benefits of Guaranteed Investment Certificate

The benefits of GIC Canada depend on the types of GIC the student opts for. Let us look at some of the benefits that students get after opting for a GIC in Canada:

1. Secure Investment: Your investment is risk-free as it is backed by Canadian financial institutions. 
2. Regular Payouts: You receive a portion of the money monthly, helping manage your living expenses. 
3. Immigration Requirements: It simplifies and speeds up the visa application process under the SDS.

How Banks Profit from GICs?

After understanding all the basics, you must be wondering: How do banks profit from GICs? Well, they profit by lending out money deposited at a higher rate than the interest it pays on GICs. If the bank sells mortgages at 8% interest and its GICs pay 5%, the bank earns 3% in profit.

Here are some points on how banks profit from GICs:

1. Risk-Free Funds: GICs provide banks with a stable source of long-term funding, reducing their reliance on short-term borrowing.

2. Competitive Rates: Banks must offer competitive GIC interest rates to attract investors and ensure they have sufficient funds for lending.

Economic Factors: The spread between lending and deposit rates can fluctuate based on economic conditions, impacting bank profitability.

Must Read: Canada Visa Types

Benefits of Guaranteed Investment Certificate

Guaranteed Investment Certificates (GICs) offer several benefits, making them a popular choice for investors seeking a low-risk investment option. Here are some of the benefits:

1. Guaranteed Returns: The primary benefit is the guaranteed return of your principal investment and interest at maturity. This eliminates the risk of losing money due to market fluctuations, unlike investments in stocks or bonds.

2. Predictable Income: GICs provide a predictable income stream, as you know the exact interest rate and maturity date upfront. This can be helpful for budgeting and financial planning.

3. Low Risk: GICs are considered a very low-risk investment option, making them suitable for risk-averse investors or those seeking to preserve capital.

4. Variety of Terms: GICs are available with a range of terms, from short-term to long-term, allowing you to choose a timeframe that aligns with your financial goals.

What Is the ‘Guarantee’ in Guaranteed Investment Certificates?

The “guarantee” in Guaranteed Investment Certificates (GICs) refers to the assured return of your principal investment and the specified interest rate at the maturity date. This means that you are guaranteed to receive back the original amount you invested, plus the agreed-upon interest when the GIC reaches its maturity date.   

This guarantee eliminates the risk of losing your initial investment due to market fluctuations, making GICs a relatively safe and low-risk investment option.

Is There a Downside to the Canadian Guaranteed Investment Certificate?

Yes, there are some downsides to Canadian Guaranteed Investment Certificates (GICs):   

• Lower Returns: GICs generally offer lower returns compared to other investment options like stocks or bonds, especially during periods of economic growth. This means your money may not grow as quickly as it could in other investments.   

• Limited Liquidity: Most GICs have fixed terms, meaning your money is locked in for a specific period. If you need access to your funds before the maturity date, you may face penalties or have to forfeit some of your interest earnings. This lack of liquidity can be a significant drawback, especially in case of unexpected financial emergencies.   
• Inflation Risk: The fixed interest rate on a GIC may not keep pace with inflation. This means that while your principal is guaranteed, the purchasing power of your money may erode over time as the cost of goods and services increases.   

• Opportunity Cost: By investing in a GIC, you may be missing out on potentially higher returns from other investment options.

 However, these options typically carry higher levels of risk.

Tips to Choose the Right Canadian GIC

Choosing the right Canadian GIC involves considering your individual financial situation and investment goals. Here are some key tips:   

1. Define your objectives for investing in a GIC. See how long you can commit your money to the GIC.
2. Compare interest rates offered by different banks and credit unions. Use online resources or consult with a financial advisor to find the most competitive rates for your desired term.   
3.  Some GICs offer interest payments at maturity, while others provide interest payments at regular intervals (e.g., monthly, quarterly, annually).
4. Pay attention to the terms and conditions, including interest rate, maturity date, interest payment options, and any potential penalties for early withdrawal.

In conclusion, GIC Canada is a mandatory financial service which all international students coming to Canada must opt for. All students are required to submit a specific amount to the GIC funds which act as proof to show the Canadian government that they can sustain themselves during their stay in the country.

FAQs 

This was all about the GIC Canada. If you have any questions about GICs or studying in Canada? Let us know in the comments down below. If you are confused about the application process to Canada for the January 2025 intake then contact Leverage Edu.