The RBI and other institutions

Besides banks, post offices offer savings schemes such as National Savings Certificates (NSC), Kisan Vikas Patra and Sukanya Samriddhi accounts. They are everywhere, even in remote places, so they are popular for saving. Where there is no bank branch, there is usually still a post office.

Some institutions support particular sectors. The Industrial Finance Corporation of India funds businesses in areas like power and textiles. NABARD (National Bank for Agriculture and Rural Development) supports rural development by funding banks that lend for farming, village industries, and infrastructure like rural roads and irrigation.

With so many banks and institutions, there must be clear rules that everyone follows. Who makes them?

The Reserve Bank of India (RBI) supervises India's banking system. It is India's central bank; many countries have a central bank to manage their banking policies.

The RBI was set up in 1935. After Independence it was taken over by the Government of India, and since 1949 it has worked as the 'banker of banks': other banks keep accounts with it, it helps them move money between each other, and it lends to banks and to the government.

The RBI makes the rules on:

• printing and distributing India's currency (banknotes);
• setting the benchmark interest rate — the basic rate at which the RBI lends to other banks, which affects all other interest rates.

At the entrance of the RBI office in Delhi stand statues of a yakṣha and a yakṣiṇī. In Hindu tradition, yakṣhas are demigods who guard the treasures of Kubera, the god of wealth. The RBI, with its sole right to issue money and its role as banker to banks, is a bit like Kubera!

Banking is far older than banks. In ancient India, temples worked a little like banks. They did not take deposits from the public, but they lent money to artisans, merchants and local governments for building works. The agreements were carved on copper plates, many of which survive. One 13th-century inscription from Kodumbalur in Tamil Nadu records communities borrowing money from a temple and agreeing to pay interest.