Economic and Non-state Institutions

• Banks


  Institutions that conduct business purely on profit motive
• Primary Functions of Banks

  • Accepting Deposits
  • Granting of Loans and Advances
• Savings Deposit


  Encourages saving habit among the public, low interest rate (around 5% per annum), withdrawals allowed with restrictions, suitable for salary and wage earners, can be opened in single or joint names
• Fixed Deposit


  Lump sum amount deposited for a specific period, higher interest rate varies with period, withdrawals not allowed before expiry
• Current Deposit


  Operated by businessmen, free withdrawals, no interest paid, service charges, overdraft facility available
• Recurring Deposit


  Operated by salaried persons and petty traders, periodic deposits, withdrawals permitted after a certain period, higher interest rate
• Types of Loans and Advances

  • Overdraft
  • Cash Credits
  • Loans
  • Discounting Bill of Exchange
• Overdraft


  Advances given to current account holders, no separate account, sanctioned against collateral security, for businessmen and firms
• Cash Credit


  Client allowed cash credit up to a specific limit, can be given to current account holders and others, separate account maintained, interest charged on amount withdrawn in excess of limit, given against security of tangible assets and/or guarantees, for longer period and larger amount than overdraft
• Loans


  Short term (1 year), medium term (5 years), long term, repayment in installments or lump sum, interest charged on sanctioned amount whether withdrawn or not, slightly lower rate than overdrafts and cash credits, normally secured against tangible assets
• Discounting Bill of Exchange

  Bank advances money by discounting or purchasing bills of exchange, domestic and foreign, bank pays bill amount to drawer/beneficiary after deducting discount charges, collects amount from drawee/acceptor on maturity
• Secondary Functions of Banks

  • Agency Functions
  • General Utility Functions
• Agency Functions


  • Transfer of Funds
  • Collection of Cheques
  • Periodic Payments
  • Portfolio Management
  • Periodic Collections
• General Utility Functions


  • Issue of Drafts and Letter of Credits
  • Locker Facility
  • Underwriting of Shares
  • Dealing in Foreign Exchange
  • Project Reports
  • Social Welfare Programs
• Corporations


  Most common form of business organizations, chartered by a state and given legal rights as an entity separate from its owners, viewed as legal persons that can be sued
• Corporations


  • Limited liability of owners, issuance of easily transferable shares, existence as a going concern
• Incorporation


  Process of becoming a corporation, gives the company separate legal standing from its owners and protects them from personal liability
• Key Responsibilities and Functions of Corporations

  • Selecting a CEO
  • Providing Continuity
  • Managing Resources Effectively
  • Increasing Profits
  • Social Responsibilities
• Cooperatives


  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


  Organizations based on membership of employees in various trades, occupations, and professions, major focus is representation of members at workplace and in wider society, seek to advance interests through rule-making and collective bargaining
• Functions of Trade Unions

  • Militant Functions
  • Fraternal Functions
  • Social Functions
  • Political Functions
• Militant Functions of Trade Unions


  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
• Fraternal Functions of Trade Unions

  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
• Social Functions of Trade Unions

  • Welfare activities
  • Education of members
  • Grievance redressal
  • Publication of periodicals, newsletters, or magazines
  • Research
• Political Functions of Trade Unions

  Affiliating the union with a political party, helping the political party in enrolling members, collecting donations, seeking the help of political parties during strikes and lockouts
• International Organizations


  Entities established by formal political agreements between members, have the status of international treaties, recognized by law in member countries, not treated as resident institutional units of the countries in which they are located
• Principal Bodies Regulating International Economic Affairs

  • World Bank
  • International Monetary Fund (IMF)
  • World Trade Organization (WTO)
• World Bank


  Set up to help the so-called underdeveloped world to integrate the poor countries into the international economy
• International Monetary Fund (IMF)


  Created to help stabilize currency exchange rates between nations and come to the aid of countries with temporary liquidity needs
• World Trade Organization (WTO)


  Determines and enforces the rules regulating international trade
• Transnational Advocacy Groups


  Advocates of principled causes, ideas, and values such as human rights or the environment, work in loose coalitions or networks across borders to bring about social change
• Development Agencies


  Establish and support sustainability programs for the community, example: Economic Development Agency aims to help create and support economic growth within a specified city, region, or state by providing necessary resources and assistance