General Investment Account-i (GIA-i)

There seems to be a lot of confusion regarding General Investment Account-i (GIA-i), so I am going to clarify some points here. 

Let's begin with a little history of Islamic banking to put things into context.


History

Before the coming into force of Islamic Financial Services Act 2013 (IFSA), there is no clear distinction between Islamic deposit and Islamic investment. General Investment Account-i (GIA-i) was considered as Islamic deposit by most banks in the past. In fact, most of Islamic FDs introduced in the early days were GIA-i. Subsequently, all deposit-based GIA-i had been converted to Term Deposit-i (TD-i) or their equivalent.
 

Current situation
 
With the coming into force of the IFSA, General Investment Account-i (GIA-i) is classified as Islamic investments. It is separate from Islamic deposits including Islamic FD and TD-i. As a result, it would no longer be eligible for protection by PIDM as they are no longer Islamic deposit accounts.

General Investment Account-i (GIA-i) is based on the contract of Mudarabah (profit sharing) where the customer act as the provider of fund and the Bank acts as the entrepreneur. The Bank will invest the funds in carefully selected Shariah's high yielding, compliant investment avenues. The profit from the investement will be shared between the Bank and customers based on the pre-agreed profit sharing ratio (PSR).

GIA-i is NOT islamic fixed deposit (FD) or term deposit-i (TD-i). It is usually grouped together with FD by the banks because of the historic ties between them and FDs and some similarities with FD. The profit rate for GIA-i is NOT fixed but based on profit sharing, so the rate quoted is only indicative.

Pros & Cons

Pros

• Potentially earn higher returns than fixed deposit
• Can withdraw anytime with no penalty on the profit rate (even if it less than a month)

Cons

• Profit is NOT guaranteed
• Principal is NOT guaranteed
• NO PIDM protection

Maybank's General Investment Account-i (GIA-i)

Minimum investment:
RM5,000 (1 month)
RM1,000 (2 months and above)

Currently, Maybank is one of the few banks that offer GIA-i in the market after the coming into force of the IFSA. Maybank is offering 4% p.a. indicative Profit Rate for GIA-i. You can even place your GIA-i online if you have an existing Current Account / Savings Account (CASA) with Maybank. Similar to eFD, you can do placement & withdrawal anytime even when the bank is closed. 



Features

• Profit calculated on daily basis 
• The profit will be paid on monthly basis and it is NOT subject to tenor or number of withdrawal
• Payment of profit is on monthly basis 

Tips

• If you want to invest for 1 month but you do not have RM5000 but only RM1000, you can select any of the other tenures above. Since you can withdraw anytime, just make sure to uplift / withdraw it after 1 month. You will get the month's profit with no penalty on premature withdrawal.

• By default when you do placement online, you cannot choose the profit payment mode. It would be credited into your CASA monthly. However, if you wish to change the profit payment mode, there is a way to do it. You can change the 'profit payment mode' to 'add to principal' on the 'Manage your accounts' page.

• Do note however about the risks involved as the profit & capital is NOT guaranteed & there is NO PIDM protection. In my opinion, the risks are rather low compared to other forms of investment like unit trust, stocks etc. In the highly unlikely event that the bank collapses, you risk losing all your money in GIA-i with the bank. So, I would NOT suggest putting all your money into GIA-i. 

Possible uses

If you are comfortable with the risk, here are some possible uses for the account: -

• An alternative to FD as it offers 4% p.a. indicative profit rate which is higher than FD board rate for most banks in Malaysia currently.

• Place to temporarily park your funds as you can withdraw it anytime and not lose out on the profit.

• An alternative to CASA for short-term or long-term savings purposes.