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Trade & Banking: Medieval India


The medieval period saw the development of Indian international commerce. Numerous foreign visitors provided evidence of a successful trade. As per records, the primary imports were luxury items such as silk.

India, as a predominantly agricultural country, was endowed with agricultural goods.

However, this does not mean that it only exports raw materials. As far as trade is concerned, the objects of commerce can be classified into two broad categories: luxury and non-luxury.

Luxury & Non-Luxury

According to medieval travellers' and Persian story reports, horses, various types of fur, valuable stones, silk and silken products, and slaves were among the most important luxury imports from central Asia and Persia.

Also, there were a variety of garments, fruits, plants, and herbs, as well as gold, silver, olive oil, rose water, and glass. India exchanged several commodities in demand not only in central Asia and Persia but also in other Asian and European nations.

Exports of luxury commodities included various types of fabric, pearls, elephants, sharp teeth and horns, and peacocks. Spices, medicinal roots, cotton, indigo-cakes, iron-swords, musk, various types of wood, sugar, sweets, and grains, fruits and dried fruits, and dyed goods were all considered non-luxury things. Gold, silver, and other precious metals played important roles in various aspects of people's lives.

The metals' economic value was the primary reason for their importance, and there are references to gold, silver, and precious metals being brought from Persia to India.


Abul Fazl

According to Abul Fazl's Ain-i-Akbari, gold was still brought into Hindustan. With the arrival of Europeans in India, a new beverage named "Cha" i", or tea, became popular during Aurangzeb's reign.

Ibn Battuta

According to mediaeval India's most renowned Arab visitor, Ibn Battuta (1333–466), he discovered vast towns with booming markets in northern and southern India.

According to Battuta’s reports, the western coast of India was densely defended with seaports, great ports, and booming commerce. Diu, Goa, Calicut, Cochin, and Quilon were the most important ports.

Direct commerce between Gujarat and Malabar was almost entirely controlled by Malabari merchants.

Way Forward

The Malabar Port: Malabar imported a variety of goods, including cocoa nuts, cardamoms, and other spices, emery, wax, and iron, sugar of some type, sandalwood, and Brazilian timber, as well as silks and other commodities (from Southeast Asia and China).

Cotton, fabric, wheat and other cereals, horses, and carnelians were the primary exports.

The Deccan Port: The Deccan ports' coastal commerce appears to have been shared by Gujarati and Malabari merchants. Formerly, they imported silk and cotton textiles, opium and common silk camlets, wheat, suitable for large, and horses, and exported cotton and linen fabrics.

They imported spices and medicines, areca and coconuts, palm sugar, wax and emery, copper and quicksilver, and cotton products, wheat, rice, millet, gingelly oil, muslins, and calicoes.

Indians also appear to have controlled the commerce on the neighbouring island of Ceylon.

The island and Colombo are reported as being visited by merchants from Coromandel, Malabar, Vijayanagara, and Gujarat kingdoms. Imports included extremely fine Cambay cotton fabric, saffron, coral, quicksilver, cinnabar, and gold and silver.

The Peninsular and Vijayanagara kingdom's coastal trade was conducted by Hindu and Muslim merchants from Malabar, with imports including areca nuts, cocoa nuts, horses, and others, and exports including rice and textiles.

Muslim traders were also seen at Pulicat, the world's largest market for Burmese rubies and musk

According to the Portuguese writer Barbosa, the wealthy seaports of Gujarat, Deccan, Malabar, and Bengal handle a huge amount of trade (inland, coastal, and international) in an incredible diversity of commodities.

West Asian Trade

India's huge offshore commerce with western Asia developed during medieval times. Venetian and other Italian traders transported the cargo over the Persian Gulf and then overland through Mesopotamia to the Mediterranean coast, as well as by water to the Red Sea ports and finally to Western Europe.

Trading Centres

Ormuz became the key role player in the trading scenario, whilst Aden and Jiddah were the two major trading centres on the latter route.

In the early fourteenth century, Ormuz was the hub of Hind and Sind trade in the early fourteenth century; merchants from Fars and Yemen landed mostly at the port of Mangalore, while Chinese ships bound for India entered only the ports of Ely (Hili), Calicut, and Quilon.

Barbosa's work provides an invaluable account of India's maritime commerce with the western world in the early sixteenth century.

Banking and Finance in Medieval India

Banking happens to be a very ancient institution in India. Money lending and local banking were associated with specific castes and individuals found across the nation.

Numerous peasants required short-term loans to bridge the income gap between harvests, to pay taxes, and to cover the costs of social gatherings.

Credit: Credit was provided by a variety of semi-professional lenders, including village headmen, wealthy agriculturalists, businessmen, zamindars (tax farmers, revenue collectors, and landlords), and a few professional moneylenders.

Interest Rates: Interest rates varied greatly and were determined by the type of security given. Typically, repayment was made in kind or via labour duty. At times, entire villages were owed to Mahajan (moneylenders) for land revenue and debt repayment.

While money lenders of different types financed farmers, local bankers focused on funding commerce, nobility, the state, and the growing East India Company. The majority were merchant bankers.

Commercial lending rates vary significantly based on the location.

Muslim Intervention

However, indigenous banking suffered a significant blow with the entry of Muslims into India, who introduced their own ideas based on Islamic values, which regarded selling one's commodities or property on interest as a serious crime.

Additional setbacks to Indian banking occurred as a result of wars and reciprocal conflicts between Muslim rulers and nobility, which slowed the expansion of trade and commerce.

As a result, banking and money lending suffered significantly for a period of time.

Cash and Credit

Despite these obstacles, medieval India created a sophisticated system of cash and kind credit from the village level to the highest commercial plateaux, which was provided by moneylenders for agricultural financing and indigenous bankers for trade finance.

Another area of activity was the financing of the state by several notable indigenous bankers: treasurers, minters, money changers, and financiers of government industrial units (karkhanas) and even of Mughal architecture's great structures.

These credit brokers operated despite the Qur'an's severe ban on interest, which was bypassed in a variety of methods.


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