Caste-based trade among the Nakarattars of Tamil Nadu banking system resembled an Economist’s model of Western-style banking systems … the Nakarattars loaned and deposited money with one another in caste-defined social relationships based on business, residential location, descent, marriage, and common cult membership.

The Nakarattar banking system was a caste-based banking system. Individual Nakarattars organized their lives around participation in and management of various communal institutions adapted to the task of accumulating and distributing reserves of capital.

The Nattukottai Chettiars (Nakarattars) of Tamil Nadu, provide an interesting illustration of how these indigenous trading networks were organized and worked. A study of this community during the. colonial period shows how its banking and trade activities were deeply embedded in the social organization of the community.

The structures of caste, kinship, and family were oriented towards commercial activity, and business activity was carried out within these social structures. As in most ‘traditional’ merchant communities, Nakarattar banks were basically joint family firms, so that the structure of the business firm was the same as that of the family.

Similarly, trading and banking activities were organised through caste and kinship relationships. For instance, their extensive caste-based social networks allowed Chettiar merchants to expand their activities into Southeast Asia and Ceylon.