Correct Option
The correct option is (b) 1 and 2 only.
Explanation
In ancient India, particularly during the period of the Second Urbanisation and the Magadhan Empire, Shrenis (guilds) functioned not only as associations of craftsmen and merchants but also as financial institutions similar to banks. They accepted deposits from the public and paid interest on them.
Statement-wise Analysis
- Statement 1 is Correct: Shrenis accepted cash deposits from the public and paid interest on the principal amount. This interest served as a return on investment for the depositor, functioning as a source of income.
- Statement 2 is Correct: Historical evidence, such as the Nasik inscription, records that royalty and wealthy merchants deposited money with guilds as permanent endowments (Akshaya Nivi). The interest generated from these deposits was frequently designated to support religious institutions, such as providing new robes, medicines, or food for monks in Buddhist monasteries.
- Statement 3 is Incorrect: While Shrenis sometimes maintained their own militias for the protection of caravans and trade routes, the interest earned from public deposits was not utilized to buy weapons for the state army. Military procurement was the prerogative of the state administration, funded by taxes, not by the interest on private guild deposits.
Key Takeaway: Shrenis acted as bankers in ancient India; the interest from deposits was used either as profit for the depositor or directed towards charitable causes like supporting religious monasteries (Sanghas).