Ram Singh does not look like a banker - but then, this barefoot 13-year-old who fends for himself on the streets of Delhi works for an unconventional bank.

Ram manages the accounts at the Fatehpuri branch of the Children's Development Bank (CDB), a multinational co-operative run for street children by street children. His office is the corner of a night shelter on a teeming back alley close to the Old Delhi railway station. It opens for an hour every evening to allow child workers to deposit and withdraw cash and even to take out small loans.

At 7pm on a Saturday, Ram is updating his ledger book, while about 25 of his customers are fixated on a Bollywood action film playing on TV in the middle of the richly graffitied hall. Their attention is broken when a large rat bounds across the room, sending several of the smaller boys in pursuit.

Ram's story is typical of the CDB's clientele: he says he left his home in Uttar Pradesh, a poor state in northern India, for Delhi because his local school was no good and he wanted to follow his older brothers to the big city. “It was time I earned my own money,” he says. He thinks he was about seven at the time.

Similar tales - often relayed, like Ram's, with something of a swagger - are common. Estimates suggest that as many as 400,000 children work on the streets of Delhi - mostly as hawkers, ragpickers and lackeys for small businesses - a figure roughly equivalent to the population of Bristol. Across the whole of India, it is reckoned that at least 18million minors lack proper homes. The vast majority of them, of course, are complete strangers to financial services.

Rita Panika, of Butterflies, the non-governmental organisation that founded the first CDB in 2001, says: “If they do not have anywhere to put their money, it often ends up being stolen - by bigger children or employers who offer to look after their pay and then refuse to hand it over.” Mindful that they had better use what they earn fast, street children often spend surplus cash on solvents to sniff, or just gamble it away. The CDB allows them to use their cash more wisely and, it is argued, gives them a greater say over their lives.

For instance, the children vote among themselves to decide who will manage the accounts. Those elected (such as Ram) are taught the basic principles of banking - but all involved pick up important life lessons, the scheme's organisers say.

“The bank helps children to prioritise their needs and think about how they use their money,” Ms Panika says. “Most importantly they learn that it is important to have goals and to work towards them.”

The first CDB branch was founded in Delhi 2001. The organisation has more than 8,250 members, all aged between eight and 18, in 12 locations - including branches in Afghanistan, Bangladesh, Nepal and Sri Lanka. The average account holds £2.50 - a useful sum if you are a minor fending for yourself in South Asia.

Savings go towards projects of varying size. Hani, 14, is withdrawing 20 rupees (24p) to buy a shirt. If he has two, he tells The Times, he can wash one while wearing the other. Amit, 13, has just returned from his home town in Uttar Pradesh, after taking 750 rupees back to his family. One lad saved a seven-figure sum and bought a shop.The bank can also provide a safety net for the young entrepreneurs. Hemaut, who says he is 13 but looks much younger, is withdrawing 80 of his 100 rupees.

It is a large chunk of his capital but this afternoon the boy, who has been on Delhi's streets for two years, was caught going about his daily trade - selling coconuts on the city's buses. An official stole all the money he had on him - 150 rupees - and took his stock. He will use the 80rupees to buy some plastic pens with lights on them, which he hopes to sell tomorrow.

Remarkably, there is no sense that Hemaut feels cheated - neither by the crooked bus inspector nor by the cards life has dealt him. “If it was not for my bank account, I'd be in real trouble,” he says.

Big numbers, small sums

— As many as 150 million children live on the world's streets

— A child in Delhi earns about 40 rupees (50p) a day

— Most street children are boys and one in twenty who are members of the CDB send money back home

— Most Indian street children earn money by selling cheap goods, often at traffic lights or on trains, or by ragpicking (sifting through rubbish). Begging is common

— A Human Rights Watch report found that “Indian street children are routinely beaten by police”

Source: Times database

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