The Nakarattars banking system is based on:-

The correct option is Caste based banking system.

The Nakarattars (historically known as Nattukottai Chettiars) are a prominent mercantile and financial caste originating from the Chettinad region of Tamil Nadu, India. During the colonial era, particularly in the 19th and early 20th centuries, they established a vast and sophisticated banking network that spanned across India, Ceylon (Sri Lanka), Burma (Myanmar), Malaya (Malaysia), and other parts of Southeast Asia.

Their banking system was fundamentally built on caste solidarity and kinship, characterized by the following aspects:
1. Kinship and Trust: Financial credit and transactions were heavily based on mutual trust within the community. Caste networks acted as a mechanism to enforce agreements and reduce transaction costs without relying solely on formal legal institutions.
2. Joint Family Firms: Business operations were organized as family firms, and capital was mobilized from within the community, leveraging caste ties to pool and allocate resources.
3. Communal Regulation: The community's temples (patrons of different clans) and caste panchayats regulated financial behavior and resolved disputes, maintaining high standards of creditworthiness within the caste network.

Thus, the financial operations of the Nakarattars represent a classic example of an indigenous, caste-based banking system.