In some traditional accounts of Indian economic history, India's economy and society are seen as unchanging. Economic transformation was though to have begun only with the advent of colonialism. Under colonialism and in the early post independence period the penetration of the commercial money economy into local agrarian economies and their incorporation into wider networks of exchange was thought to have brought about radical social and economic changes in rural and urban society. While colonialism certainly brought about major economic transformations for example due to the demand that land revenue be paid in cash, recent historical research has shown that much of India's economy was already extensively monetised in the late pre-colonial period.
And while various kinds of non market exchange systems did exist in many villages and regions even during the pre-colonial period villages were incorporated into wider networks of exchange through which agricultural products and other goods circulated. Recent historical research has also highlighted the extensive and sophisticated trading networks that existed in pre-colonial India. The traditional trading communities or castes had their own systems of banking and credit. An important instrument of exchange and credit was the hundi or bill of exchange which allowed merchants to engage in long distance trade.
The Nattukottai Chettiars of Tamil Nadu provide an interesting illustration of how these indigenous trading networks were organized and worked. 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.Nakarattar banks were basically joint family firms so that the structure of the business firm was the same as that of the family.
Trading and banking activities were organized through caste and kinship relationships. Their extensive caste-based social networks allowed Chettiar merchants to expand their activities into Southeast Asia and Ceylo.The economic activities of the Nakarattars represented a kind of indigenous capitalism.