'banian' originates from Hindi (via Gujarati and Persian trade usage), specifically the word 'baniya' (बनिया) / Sanskrit 'vaṇij', where 'vaṇij' meant 'trader, merchant'.

'banian' entered English in the 17th century through contacts between European traders and Indian merchants; initially it referred to Indian merchants (the 'banias'), and from there English also adopted spellings and senses such as the loose garment ('banyan/banian') and the banyan tree (possibly by association with merchants who sheltered under large fig trees).

Initially it meant 'merchant' (an Indian trader), but over time it was extended to mean 'a loose gown or jacket' and also applied to the 'banyan' tree.