Indigenous bankers constitute the ancient banking system of India. They have been carrying on their age-old banking operations in different parts of the country under different names.
In Chennai, these bankers are called Chettys ; in Northern India Sahukars, Mahajans and Khatnes; in Mumbai, Shroffs and Marwaris; and in Bengal, Seths and Banias. According to the Indian Central Banking Enquiry Committee, an indigenous banker or bank is defined as an individual or private firm which receives deposits, deals in hundies or engages itself in lending money.
The indigenous bankers can be divided into three categories:
(a) those who deal only in banking business (e.g., Multani bankers);
(b) those who combine banking business with trade (e.g., Marwaris and Bengalies); and
(c) those who deal mainly in trade and have limited banking business.
The indigenous banker is different from the moneylender. The moneylender is not a banker; his business is only to lend money from his own funds. The indigenous banker, on the other hand, lends and accepts funds from public.