The Indian subcontinent enjoyed a favourable balance of trade where exports exceeded imports with large margins. This created a conducive environment for the indigenous banking system to develop, benefitting manufacturers, traders, and merchants with additional capital funds for expansion and development.

Goods were traded both internally and to foreign lands, generating surplus income. People engaged in various economic activities like agriculture, weaving cotton, dyeing fabrics, making clay pots, handicrafts, and masonry. Family-based workshops (karkhanas) were important components of economic life. This money was channelized into further investment, leading to the dominant growth of indigenous banking to finance trading activities.

An important development was the use of Hundi and Chitties (used in southern region). These were documents facilitating transfer of money for trading activities. As an instrument of exchange, it involved a contract warranting unconditional payment of money, capable of change through valid negotiation.

The need for intangible form of exchange arose because travelling long distances by land or sea involved risk of theft and robbery. Hundi, meaning 'to collect', was written in vernacular language, facilitating safe transfer of money and promoting trading activities.

Later, Commercial and Industrial banks evolved to finance trade and commerce, while agricultural banks provided short and long-term loans to agriculturists. The emergence of credit transactions enhanced commercial operations, making India known as 'Swaran Bhoomi and Swaran Deep'.