GIC- The name “GIC” stands for “Guaranteed Investment Certificate,” and it refers to a short-term liquid investment that Canadian banks typically issue for up to a year. It is intended for Indian students who wish to enrol at universities that are part of the Student Partners Program (SPP) in Canada.
In this section, we are going to discuss how is GIC account beneficial for students as well as the key factors any Student who wishes to aspire abroad education must know about the term.
As we have discussed the deposit investment known as a guaranteed investment certificate (GIC) is offered by banks and trust organizations in Canada. Because of the low-risk fixed rate of return they offer and the fact that they are partially guaranteed by the Canadian government, people frequently buy them for retirement planning.
Benefits from a GIC account:
Low concern: Term deposits and GICs are typically regarded as low-risk investments that are secure since the principle is always guaranteed.
Assurance of growth: Your GIC investment will generate interest regardless of what happens in the markets.
Flexibility: There are a variety of term and interest rate choices. Either pick a cashable GIC that allows you to retrieve your money before the term expires or lock your money in to earn a greater interest rate.
simple to maintain: As relatively inexpensive and predictable and require little monitoring, they are simple to comprehend and maintain.
Savings Defense: If someone is truly interested in saving money for studying abroad, a savings protection GIC is a better alternative than a savings account.
Frequently Asked Questions:
How to open a student GIC account from India?
When opening a GIC account from India, it is important to ensure that the chosen financial institution participates in the program that meets the requirements for international students. Additionally, individuals should be prepared to provide the necessary documentation, such as a passport, study permit, and proof of funds, to complete the account opening process.
You can create a GIC account online through ICICI bank by following the steps mentioned below:
Visit the ICICI Bank Canada website and select the “Student GIC Program” option and click on New User Registration.
Complete the online application form with all necessary personal and financial information.
Upload scanned copies of your passport, study permit, and any other required documentation.
Download the funding instruction page and share it with your bank to make the wire transfer. Please note that the payment can be sent through banks and other AD II companies.
Once the funds have been received, ICICI Bank will issue a GIC certificate and email it to you.
You can then use the GIC certificate to apply for your Canadian study permit.
GIC: Is it superior to a savings account?
In this instance, a GIC is a terrific solution for investing novices. Your money is secure since it is guaranteed, and the interest rates are frequently higher than those provided by high-interest savings accounts.
What is the GIC’s minimum & maximum amount?
The amount you can put into a GIC has no upper limit. The majority of GICs offer fixed interest rates for predetermined terms, such as half-yearly, a year, two years, or up to ten years. The minimum Guaranteed Investment Certificate (GIC) amount for Indian students applying for a Canadian study permit is currently CAD 10,000.
When the minimum amount of GIC is CAD 10000, then why do we need to send CAD 10175 or CAD 10200?
The reason for sending CAD 10,200 or CAD 10175 instead of the minimum required amount of CAD 10,000 for the Guaranteed Investment Certificate (GIC) program is to cover the transaction fees and other bank charges associated with the transfer of funds to Canada. After the deduction of transfer fees, the bank deposits the balance amount in your GIC account.
Best way to open a GIC account & making payments at the lowest exchange rate?
Students can open a GIC account through ICICI bank’s student GIC programs detailed above and it hardly takes 5 minutes to open a GIC account online. For making the payment you need to compare exchange rates and transaction charges offered by various institutions. The best way is to visit ibrlive.com and contact them for making your payment at the best possible lowest exchange rate and transaction fees. They help you in opening the GIC account and sending your payment at affordable rates by saving you time and money.
GIC: Does it pay interest every month?
For GICs with durations of one year or more, interest is computed daily on the principal amount and is paid either monthly, yearly, or at maturity after compounding annually. For GICs with durations less than a year, interest is accrued daily and paid at maturity based on the principal.
Can my GIC account be broken before maturity?
The Guaranteed Investment Certificate (GIC) account for Indian students in Canada is open for a period of one year. The GIC account is a requirement of the Canadian government’s Student Direct Stream (SDS) program, which is available to international students from India, China, the Philippines, and Vietnam who are applying to study at a Designated Learning Institution (DLI) in Canada.
The funds in the GIC account are held for the duration of the student’s first year of study in Canada and are intended to help cover the student’s living expenses while studying in Canada.
After the first year, the funds from the GIC account can be withdrawn in instalments to help cover living expenses or other expenses related to their studies in Canada. It is important to note that the GIC account must remain open for the full one-year period as a requirement of the SDS program, and the funds cannot be accessed until the end of the one year.
Please feel free to contact us if your question is not answered here and you still have concerns. We promise to assist you as best we can.
Interbank exchange rates refer to the exchange rates at which banks buy and sell currencies from each other. These rates are important because they affect the value of currencies for businesses and individuals who need to exchange money across different countries. In this blog, we’ll explore what is IBR Rate, how they’re determined, where to find authentic & real-time exchange rates and why they matter.
What are interbank exchange rates?
Interbank exchange rates are the exchange rates at which banks buy and sell currencies from each other. Interbank exchange rates are also commonly referred to as spot rates. The spot rate is the exchange rate at which a currency can be bought or sold for delivery within two business days. These rates are typically used as a benchmark for exchange rates in the wider market, as they reflect the rates at which banks with significant trading volumes can exchange currencies with each other.
The interbank rate is used by banks to settle transactions between themselves, such as when one bank needs to pay another bank in a different currency. These rates are typically quoted with a bid-ask spread, which represents the difference between the price at which banks are willing to buy and sell currencies. The bid price is the price at which a bank is willing to buy a currency, while the asking price is the price at which it’s willing to sell the currency.
How are interbank exchange rates determined?
Interbank exchange rates are determined by supply and demand in the foreign exchange market. Banks with excess currencies will offer them for sale, while banks that need those currencies will buy them. The exchange rate at which these transactions occur is determined by the market, based on the supply and demand for each currency.
Many factors can affect the supply and demand for currencies in the foreign exchange market. These include factors such as economic data, central bank policies, political events, and natural disasters, among others. Changes in any of these factors can cause fluctuations in exchange rates.
Where you can find authentic & real-time interbank exchange rates?
Although many sources are available online to find interbank exchange rates, not all are authentic and real-time. The best platform that displays accurate & live interbank exchange rates is https://ibrlive.com. You can find IBR rates of almost all currencies on this website, which is free of charge.
Why do interbank exchange rates matter?
Interbank exchange rates are important because they affect the value of currencies for businesses and individuals who need to exchange money across different countries. For example, if you’re a business that needs to pay a supplier in another country, you’ll need to exchange your local currency for the currency of the country where your supplier is located. The exchange rate you receive will determine how much of your local currency you need to exchange to pay your supplier.
In addition, IBR rates can affect the profitability of businesses that operate in multiple countries. If a company earns revenue in one currency but has expenses in another currency, changes in the exchange rate can affect its profit margin.
Finally, IBR rates can also have an impact on the wider economy. For example, strengthening a country’s currency can make its exports more expensive and less competitive in foreign markets. This can lead to a reduction in exports and a negative impact on the country’s economy.
In conclusion, interbank exchange rates are an important component of the foreign exchange market. They are used by banks to settle transactions between themselves and serve as a benchmark for exchange rates in the wider market. Understanding how these rates are determined and why they matter can help businesses and individuals make better decisions when it comes to exchanging currencies.
A forex card exchange rate is like a display board where a bank publishes exchange rates for buying and selling foreign currencies, travel cards, and currency notes. The spread between buying and selling currencies in a card rate is generally kept very wide. For example, SBI forex card rates for USD/INR can be in the form of the below-mentioned table:
Currency
Bank Buying Rate
Bank Selling Rate
TT Buying rate
Bills Buying rate
Currency notes
Travel card
Traveller’s cheques
TT Selling rate
Bills Selling rate
Currency notes
Travel card
Traveller’s cheques
Demand draft
United States Dollar (USD)
80.94
80.94
79.45
80.69
80.69
84.58
84.58
85.94
84.36
84.36
84.24
When a bank displays a card rate for foreign exchange, it may show both the TT buy rate and the TT sell rate. The TT buy rate is the rate at which the bank will buy foreign currency from the customer in exchange for local currency. The TT sell rate is the rate at which the bank will sell foreign currency to the customer in exchange for local currency. The difference between the TT buy and TT sell rates is known as the bid-ask spread, and it represents the bank’s profit margin for facilitating the transaction. The bid-ask spread can vary depending on various factors, such as market conditions, currency volatility, and the size of the transaction. Customers need to understand the card rate and the bid-ask spread to make informed decisions about foreign exchange transactions and to minimize the costs associated with such transactions.
Do the forex card rates of each bank differ?
The card rate can differ across banks. Each bank sets its own card rate based on a variety of factors, such as its cost of acquiring foreign currency, operating expenses, and profit margin.
The differences in card rates across banks can impact the cost of foreign exchange transactions for customers. Therefore, comparing the card rates offered by different banks before making a foreign exchange transaction is essential to get the best possible rate.
What is the difference between the card rate & interbank exchange rate?
The card and interbank exchange rates are two different rates used in foreign exchange transactions. The main differences between the two are:
Definition: The interbank exchange rate is the rate at which banks buy and sell currencies with each other in the wholesale market. It is used by banks to settle their transactions and by other financial institutions as a benchmark for pricing their foreign exchange products.
On the other hand, the foreign exchange card rate, refers to the rate derived on a daily basis by bank based on the interbank exchange rates by keeping a substantial margin on buy and sell foreign exchange transactions. Generally the margin loaded in forex card rate is more than 1 rupee on USD/INR transactions, 2 rupee on EUR/INR transactions and 3 Rupee on GBP/INR transactions. This margin can vary across banks based on their different strategies and other market factors.
Calculation: Numerous economic considerations and market dynamics of supply and demand as well as market dynamics of supply and demand, influence the interbank exchange rate. While the bank’s profit margin, the interbank rate, and any other fees or charges are all included in the card rate, which is established by the bank.
Spread: The difference between a currency pair’s purchasing and selling rates for a currency pair is known as the bid-ask spread. Due to banks’ high volume of transactions, the spread for interbank exchange rates is normally quite small, with only a few pips. For example the spread between USD to INR IBR rate is generally 1 to 3 paisa only. As a result of the bank’s profit margins and other expenses related to supplying retail consumers with foreign exchange services, the gap in card rates is often greater and can range between 1 to 3 Rupees.
The government had received requests from Export Promotion Councils and leading exporters that they should continue with the current Foreign Trade Policy (2015-20), which had been extended from time to time.
The government has always involved all stakeholders in formulating policy. Hence, it was decided to extend the Foreign Trade Policy 2015-20, valid till Sept 30, 2022, for a further period of six months, till 31.03.2023.
On March 31, 2023, Shri Piyush Goyal, the Hon. Minister of Trade and Industry, revealed his proposed foreign policy for the years 2023 to 2028.
The policy is in place as of April 1, 2023, and it remains in place through March 31, 2028.
The new global trade policy’s goal, unveiled in March 2023, is to grow India’s exports to $2 trillion by 2030. Its flexible and open-ended nature allows it to adapt to changing needs.
The policy is built around four pillars: Developing Areas, Export Growth through Collaboration, Incentive to Remission, and Ease of Doing Business.
A one-time amnesty program is introduced in the FTP 2023 to allow exporters to finish up any old outstanding authorizations and start over.
The “Towns of Export Excellence Scheme” and the “Status Holder Scheme,” promotes the recognition of new towns and exporters, respectively.
The policy emphasizes process re-engineering and automation to make doing business easier for exporters and growing sectors, including dual-use high-end technological products under e-commerce export, SCOMET, and merchanting trade from India.
The strategy strongly emphasizes export development and promotion, shifting from an incentive system to one that is facilitating and built on the technological interface and collaborative principles.
Building on prior “convenience initiatives,” the guideline also codifies implementation procedures in a paperless, online world.
Here are the key points of the new foreign trade policy:
The Foreign Trade Policy (FTP) 2023 is a dynamic, open-ended policy that will accommodate emerging needs.
The policy aims to increase India’s exports to $2 trillion by 2030.
The four pillars of FTP 2023 are Incentive to Remission, Export promotion through collaboration, Ease of doing business, and Emerging Areas.
The policy is based on the continuity of time-tested schemes facilitating exports and a nimble document responsive to the trade requirements.
The FTP 2023 encourages recognition of new towns through the “Towns of Export Excellence Scheme” and exporters through the “Status Holder Scheme.”
The new FTP is offering a one-time Amnesty Program for exporters to finish the previous round of pending authorizations and begin anew.
The strategy strongly emphasizes export development and promotion, shifting from an incentive system to one that facilitates trade and is based on concepts of cooperation and technological interface.
Exporters are being given more credit by using automatic IT technologies with a risk-management framework for various permissions under the new FTP.
Regional Offices will now administer duty exemption programs for export manufacturing in a regulated IT system environment, doing away with the necessity for a manual interface.
The FTP 2023 expands on prior “ease-of-doing-business initiatives” by codifying implementation procedures in an online, paperless environment.
Due to reduced pay structures and IT-based programs, MSMEs and other groups will find it simpler to enjoy export benefits.
In addition to the 39 existing towns, four additional towns—Faridabad, Mirzapur, Moradabad, and Varanasi—have been named Towns of Export Excellence (TEE).
Overall, the new FTP aims to promote exports, enhance competitiveness, and promote sustainable development in the Indian economy.
A forward contract is a contract between the bank and its customer to buy or sell a specific currency at a specified future price for delivery on a specified future day beyond the Spot Date.
Period of Delivery:
A contract can be booked for a future fixed date of delivery or can have a window period of delivery where the contract must state the first & last date of delivery. The window period should be specified by the customer in such a way that the last date of delivery shall not exceed 1 month.
For Example: 19th Apr 2023 to 18th Mar 2023 & 31st Jan 2023 to 28th Feb 2023
Delivery in case of Holiday:
If the fixed date of delivery or the last date of delivery is a known holiday (which is known at least 3 working days before the date) the last date for delivery should become the preceding working day. In case of suddenly declared holidays, the contract shall be deliverable on the next working day
For Foreign Exchange business, Saturday will not be treated as a working day
Early delivery:
Yes, a forward contract can be utilized before its utilization period starts. In this case, the bank can recover or pay the swap difference. The bank also recovers the Interest on outlay and inflow of funds for such swaps.
Extension of forward contract:
In an extension of the forward contract, the earlier contract is cancelled at the current selling or buying rate and rebooked simultaneously at the current market rate. The difference between the earlier booked rate and the rate at which the contract is cancelled is recovered or paid to the customer.
Recovery/ Payment of Loss /Gain:
In case of cancellation of a contract at the request of a customer and if the request is made on or before the maturity date the bank recovers the loss or passes on the profit, the actual difference between the booked rate and the rate at which the cancellation is affected.
In the absence of any instructions from the customer, a contract which has been matured is cancelled by the bank within the 3 working days after the date of maturity
Please note that if a contract is cancelled after the maturity date, the bank is not liable to pass on the profit on the contract, if any, but the loss incurred in the contract shall be recovered from the customer.
Different Schemes of Hedging of Foreign Currency Exposure through forward contracts?
There are two types of exposures under which hedging can be done i.e. Contracted & Anticipated, all existing facilities such as Past Performance, Simplifies hedging, and Self-declaration have been withdrawn with effect from 01 September 2020 by RBI vide its master direction RBI/FMRD/2016-17/31 updated on 01.09.202.
What is contracted exposure?
It is an exposure to the exchange rate of the Indian Rupee against a foreign currency on account of current and capital account transactions permissible under FEMA, which have already been entered into. For Example, if an exporter has already received a purchase order and agreed to supply goods against it, then booking a forward contract against the same order is called contracted exposure.
What is anticipated exposure?
Exposure to the exchange rate of the Indian Rupee against a foreign currency on account of current and capital account transactions permissible under FEMA, which are expected to be entered into the future. For Example, if an exporter expects that he will receive a purchase order of at least 1 million dollars every month based on his experience and prospects, then booking a forward contract for such future exposures is called anticipated exposure.
What is the difference between contracted exposure and anticipated exposure for hedging foreign currency exposure by resident Indians?
Contracted Exposure
Anticipated Exposure
Exposure is hedged based on the contractual exposure which already exists
Exposure is hedged based on the exposure which is anticipated in future.
Proof of underlying exposure is not required for booking forward contracts up to USD 10 Million or its equivalent, however, the bank can demand the same whenever is required
Proof of underlying exposure is not required for booking forward contracts up to USD 10 Million its equivalent
Application & Forward Booking confirmation to be submitted to AD Bank within 15 calendar days through digital/ physical mode
Application & Forward Booking confirmation to be submitted to AD Bank within 15 working days through digital/ physical mode
Can be rebooked or cancellation
Can be rebooked or cancelled
Profit or loss fully passed or recovered
Losses are recovered upfront however profit is withheld & passed to the customer after submission of necessary documentation proof of Cash Flow.
Authorised Dealers may, in exceptional cases, pass on the net gains on contracts booked to hedge an anticipated exposure whose underlying cash flow has not materialised, provided it is satisfied that the absence of cash flow is on account of factors which are beyond the control of the user
The notional and tenor of the contract should not exceed the value and tenor of the exposure.
The notional and tenor of the contract should not exceed the value and tenor of the exposure.
If outstanding notional increasing USD 10 mio in the same FY underlying documents are required for fresh booking as well as for existing outstanding contracts
If outstanding notional increasing USD 10 mio in the same FY, evidence of cash flows on a contract basis is required for all outstanding contracts
The same exposure should not be hedged using any other derivative contract.
The same exposure has not to be hedged using any other derivative contract.
CGTMSE Scheme: Maximum Coverage Raised to Rs. 500 Lakhs
The Indian economy is supported by micro and small businesses (MSEs). However, because they frequently lack collateral or credit history, small companies frequently struggle to get loans from conventional financial institutions. (CGTMSE) the scheme was created by the Indian government to address this issue.
(SIDBI) and (MSMEs) introduced the CGTMSE program in August 2000. By ensuring a percentage of the loan amount, the initiative aims to give micro and small businesses access to credit without the need for collateral.
A lender (bank or finance institution) gives loans to MSEs within the CGTMSE scheme without requiring any kind of security. Any micro or small enterprise engaged in manufacturing, trading or service activities can avail of the benefits of the CGTMSE scheme. The scheme covers both new and existing enterprises, including those in the retail trade, agriculture, and allied activities.
According to a notification issued by the Indian government on March 31, 2023, there have been substantial changes made to the (CGTMSE) program. The CGS-I scheme’s coverage ceiling has been raised from Rs. 200 lakhs to Rs. 500 lakhs as a result of the notification with reference number CGTMSE/44/293 and circular number 220/2022-23.
The CGS-I scheme provides credit guarantees for micro and small enterprises (MSEs) for the credit facilities extended by eligible Member Lending Institutions (MLIs). The coverage under the CGS-I scheme has been increased from Rs. 200 lakhs to Rs. 500 lakhs per borrower
The revised modifications will be applicable for all guarantees approved on or after April 01, 2023, including enhancement in the working capital of existing covered accounts. All other terms and conditions of the scheme shall remain unchanged.
The increase in the ceiling of coverage under the CGS-I scheme is a significant development that will benefit micro and small enterprises. It will enable these enterprises to access higher credit facilities without any collateral, thereby promoting entrepreneurship and creating employment opportunities. The CGTMSE scheme has been instrumental in supporting the growth of MSEs in India, and this modification will further strengthen its impact on the economy.
To be eligible for the CGTMSE scheme, the enterprise should have a good track record and creditworthiness. It should also have a viable project report, which is evaluated by the lending institution. The scheme is not available to enterprises engaged in speculative or illegal activities.
The premium for the guarantee covered under the CGTMSE scheme is borne by the borrower, and it varies according to the amount of the loan and the tenure of the loan. The premium rates are lower for women entrepreneurs and for enterprises located in the North-Eastern Region and the hilly states.
In conclusion, the CGTMSE scheme is a significant initiative by the Government of India to support the growth of SMEs in the country. By providing collateral-free credit and guarantee cover, the scheme has made it easier for SMEs to obtain loans from banks and financial institutions. The scheme has contributed significantly to the development of the SME sector and has played a vital role in promoting economic growth and employment generation in the country.
