SH1661

Non-state Institutions

Banks are institutions that conduct business purely on profit

motive.
I. Primary Functions
These are also known as banking functions. These functions pertain to the execution of the
following tasks:
A. Accepting Deposits – The bank collects deposits from the public. These can be classified
into four (4) types:
Savings – This encourages saving habit among the public. The rate of interest is low.
At present, it is about 5% per annum. Withdrawals of deposits are allowed, subject to
certain restrictions. This account is suitable to salary and wage earners. This account
can be opened in single name or in joint names.
Fixed – Lump sum amount is deposited at one (1) time for a specific period. Higher
rate of interest is paid, which varies with the period of deposit. Withdrawals are not
allowed before the expiry of the period. Those who have surplus funds go for fixed
deposit.
Current – This type of account is operated by businessmen. Withdrawals are freely
allowed. No interest is paid. In fact, there are service charges. The account holders can
get the benefit of overdraft facility.
Recurring – This type of account is operated by salaried persons and petty traders. A
certain sum of money is periodically deposited into the bank. Withdrawals are
permitted only after the expiry of a certain period. A higher rate of interest is paid.
B. Granting of Loans and Advances – Bank advances loans to the business community and
other members of the public. The rate charged is higher than what it pays on deposits. The
difference in the interest rates, including the lending rate and the deposit rate, is its
profit.
There are four (4) types of loans and advances:
Overdraft – These advances are given to current account holders. No separate account
is maintained. All entries are made in the current account. A certain amount is
sanctioned as overdraft, which can be withdrawn within a certain period of time, say
three (3) months or so. Interest is charged on actual amount withdrawn. An overdraft
facility is granted against a collateral security. It is sanctioned to businessman
and
firms.
Cash Credits – The client is allowed cash credit up to a specific limit fixed in advance.
It can be given to current account holders as well as to others who do not have
an
account with bank. Separate cash credit account is maintained. Interest is charged on
the amount withdrawn in excess of limit. The cash credit is given against the security
of tangible assets and/or guarantees. The advance is given for a longer period and
a
Loans – It is normally for short term (a period of one [1] year) or medium term (a period
larger amount of loan is sanctioned than that of overdraft.
of five [5] years). These days, banks do lend money for long term. Repayment of money
can be in the form of installments spread over a period of time or in a lump sum amount.

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 SH1661

Interest is charged on the actual amount sanctioned, whether withdrawn or not.

The
rate of interest may be slightly lower than what is charged on overdrafts and
cash
Discounting Bill of Exchange – The bank can advance money by discounting or by
credits. Loans are normally secured against tangible assets of the company.
purchasing bills of exchange, both domestic and foreign bills. The bank pays the bill
amount to the drawer or the beneficiary of the bill by deducting usual discount
charges.
On maturity, the bill is presented to the drawee or acceptor of the bill and the amount
is collected.
II. Secondary Functions
These are also called as non-banking functions. These are responsible for the following tasks:
A. Agency Functions – The bank acts as an agent of its customers such as trustees, executors,
advisers and administrators on behalf of its clients. They also act as representatives of
clients to deal with other banks and institutions. These include the following transactions:
Transfer of Funds – The bank transfer funds from one branch to another or from one
place to another.
Collection of Cheques – The bank collects the money of the cheques through the
clearing section of its customers. The bank also collects money of the bills of exchange.
Periodic Payments – On standing instructions of the client, the bank makes periodic
payments in respect of electricity bills, rent, etc.
Portfolio Management – The banks also undertakes to purchase and sell the shares and
debentures on behalf of the clients and accordingly debits or credits the account. This
facility is called portfolio management.
Periodic Collections – The bank collects salary, pension, dividend, and such other
periodic collections on behalf of the client.
B. General Utility Functions – The bank also performs the following tasks:
Issue of Drafts and Letter of Credits – Banks issue drafts for transferring money from
one place to another. It also issues letter of credit, especially in case of, import trade. It
also issues travelers’ cheques.
Locker Facility – The bank provides a locker facility for the safe custody of valuable
documents, gold ornaments, and other valuables.
Underwriting of Shares – The bank underwrites shares and debentures through its
merchant banking division.
Dealing in Foreign Exchange – The commercial banks are allowed by Reserve Bank
of India (RBI) to deal in foreign exchange.
Project Reports – The bank may also undertake to prepare project reports on behalf of
its clients.
Social Welfare Programs – It undertakes social welfare programs, such as adult literacy
programs, public welfare campaigns, etc.

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 SH1661

Corporations are the most common form of business organizations. These are chartered by a state
and given many legal rights as an entity separate from its owners. According to Cornell University,
they are viewed as legal persons, which means they can be sued for not carrying out
certain
functions
This form orofresponsibilities.
business is characterized by the limited liability of its owners, the issuance of shares
of easily transferable stock, and existence as a going concern. The process of becoming
a
corporation, called incorporation, gives the company separate legal standing from its owners
and
protects those owners from being personally liable in the event that the company is sued,
a
condition known as limited liability. Incorporation also provides companies with a more flexible
way to manage their ownership structure. In addition, there are different tax implications
for
I. Selecting a CEO – The board of directors of a small corporation is responsible for selecting a
corporations, although these can The
be advantageous and that
disadvantageous. In these
chief executive officer (CEO). CEO then ensures the management team and
respects,
employees adhere to all policies and procedures instituted by the board of directors, lawyers,
corporations differ from sole proprietorships and limited partnerships. It has several key
and himself. Corporate CEO's typically select management teams or executives to help them
responsibilities and functions, which are as follows:
run their organizations. It is also the responsibility of the corporation to create an organizational
structure that allows it to function most effectively. The management team then
develops
certain strategies to get the corporation headed in the right direction.
II. Providing Continuity – Small corporations are formed to stay in business on a permanent
basis. Therefore, another corporate function is continuity of business. This essentially means
that a corporation must continue to function when people are fired, leave the company or
pass
away. Executives, including the CEO, must be replaced by other competent and talented
individuals. Directors and lower-level managers also have the responsibilities of hiring and
training enough
III.Managing workers
Resources to keep –the
Effectively company
A small running. is also responsible for managing its
corporation
resources effectively. Those involved in manufacturing must procure the necessary raw
materials to create products. Small wholesale companies must find suppliers for their
products.
Corporations must then keep products flowing to ensure they are in stock when customers
need
IV. them. The Profits
objective– All
of most corporations
are in isbusiness
to minimize
to earnwaste. Therefore, many managers
Increasing corporations a profit. However, corporations
order supplies and products as they are needed, accounting for the time it takes to ship
are also responsible for increasing profits to maximize those of their shareholders. The
products.
shareholders have ownership in a corporation. They earn profits on their initial and additional
investments. These are called "earnings per share," which a small corporation has the
responsibility of maximizing each quarter or year. Corporations maximize shareholders'
earnings by selling more products and keeping major costs in line: Production, labor,
inventory, supplies, and overhead like rent and utility expenses.
V. Social Responsibilities – Corporations are also responsible for giving back to their
communities. Many sponsor events or organizations such as symphony orchestras in their
community. They may also have employees who collect monies for various diseases or
illnesses, donating to local charities and foundations. Another social responsibility is keeping
residences safe from environmental issues. Therefore, corporations may install certain filters
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 SH1661

or protective barriers at plants. Corporate officers may also apprise the community when
accidents occur that may be detrimental to peoples' health. Some small corporations may
even
use greener or environmentally safe substances during the manufacturing process.
Cooperatives are autonomous associations of persons united voluntarily to meet their
common
economic, social, and cultural needs and aspirations through a jointly-owned and democratically-
controlled enterprise.
Trade Unions, on the other hand, are organizations based on membership of employees in various
trades, occupations, and professions, whose major focus is the representation of its members at
the
workplace and in the wider society. These particularly seek to advance its interest through
the
process of rule-making
I. Militant Functions and collective bargaining. These perform a number of functions, which can
be classified into four (4) categories:
To achieve higher wages and better working conditions
To raise the status of workers as a part of industry
To protect labors against victimization and injustice
II. Fraternal Functions
To generate self confidence among workers
To encourage sincerity and discipline among workers
To provide opportunities for promotion and growth
To protect women workers against discrimination
Welfare
III.Social activities provided to improve the quality of work life, including organization of
Functions
mutual fund, cooperative credit societies for providing housing, cooperative stores,
cultural
programs, banking and medical facilities, and training for women in various crafts to help
them to supplement their family income.
Education of members in all aspects of their working life , including improvement of their
civic life, awareness in the environment around them, enhancement of their
knowledge
particularly about issues that concern them, their statutory and other rights
and
responsibilities, and workers’ participation in management.
Scheme and procedure for redressing their grievances. Some central union organizations
are also assisting the Government in implementing the Workers’ Education Scheme.
Publication of periodicals, newsletters, or magazines for establishing communication with
their members, making the latter aware of union policy and stand on certain principal
issues
and personnel matters concerning members such as births, deaths, marriages,
promotions,
and achievements.
Research provides updated information to union negotiators at the bargaining table. Such
research is to be more practical than academic, concerning problems relating to daily
affairs
of the union and its activities, and union and management relations. Some of the
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activities are: (i) collection and analysis of wage data including fringe benefits, and other
benefits and services through surveys of comparative practices, data on working conditions
and welfare activities; (ii) preparation of background notes for court cases and also position
papers for union officials; (iii) collection and analysis of macro data relating to the
 SH1661

economy, industry sectors etc. All the above mentioned activities and services are
considered normal activities of unions in the Trade Unions Act, which stipulates
the
objectives on which general funds of the union can be spent.
IV. Political functions
These include affiliating the union with a political party, helping the political party in enrolling
members, collecting donations, and seeking the help of political parties during the periods
of
strikes and lockouts.
International Organizations are entities established by formal political agreements between
their
members who have the status of international treaties. Their existence is recognized by law in their
member countries; and they are not treated as resident institutional units of the countries in
which
they are located. It plays a central role in defining and reinforcing how the global economy
works.
I. World Bank – It was set up to help the so-called underdeveloped world to help integrate the
The three (3) principal bodies responsible for regulating international economic affairs are
poor countries into the international economy.
the
II. International Monetary Fund (IMF) – It was created to help stabilize currency exchange
following:
rates between nations; and to come to the aid of countries with temporary liquidity needs.
III.World Trade Organization (WTO) – It determines and enforces the rules regulating
international trade.

Transnational Advocacy Groups are advocates of principled causes, ideas, and values such as
human rights or the environment. They do not work alone nor are they limited by
national
boundaries. The last several decades have witnessed significant growth in the number
loose
Development Agencies
coalitions or networks ofestablish
advocatesand supportbridges
building sustainability
across programs
borders to for theabout
bring community.
social change.
Example: Economic Development Agency - Its goals are to help create and support economic
growth within a specified city, region, or state by providing necessary resources and
assistance.

References:
CECOP. (2006-2014). Cooperatives. European Cooperative House . Retrieved from http://www.cecop.coop/What-
is-a-cooperative
Center on Law and Globalization. (2014). How do transnational advocacy network work ?. Retrieved from
https://clg.portalxm.com/library/keyte xt.cfm?keyte xt_id=114
Houston Chronicle. (2014). Functions and responsibilities of a corporation .Hearst Newspaper, LLC. Retrieved
from http://smallbusiness.chron.com/functions -responsibilities-corporation-34641.html
Investor Word. (2014). Corporation. Web-finance, Inc. Retrieved from
http://www.investorwords.com/1140/corporation.html
Patil, M. (2008-2014). Functions of bank s.Kalyan City Life. Retrieved from http://kalyan -
city.blogspot.com/2011/04/functions -of-banks-important-banking.html
Bank s.(n.d.). Retrieved from http://www.business -science-articles.com/articles/business/76-functions-of-banks-i-
primary-and-secondary
Functions of trade unions .(n.d.). Retrieved from http://www.whatishumanresource.com/functions -of-trade-unions
Role of international organizations .(n.d.). Retrieved from
http://www.selba.org/EngTaster/Economics/GlobalEconomy/RolInternOrganizations.ht ml

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