In Medieval India, Khanqahs were basically Sufi shrines. Sufism is a mystical Islamic belief that emphasizes a personal and direct relationship with God. Sufi practitioners, known as Sufis, would gather in these Khanqahs to engage in spiritual practices such as prayer, meditation, recitation of poetry, and communal worship.

Option 1 is the correct answer. Sufi shrines were not only places of religious and spiritual activities, but they also played an important role in promoting social harmony and cultural integration. People from different backgrounds and social classes would come to these Khanqahs to seek blessings, guidance, and solace. The Sufi saints who resided in these shrines were highly respected and considered spiritual mentors or guides. They were known for their humility, simplicity, and dedication to the service of others.

Options 2 and 3, state granaries and provincial treasuries, were government institutions and not related to Khanqahs.

Option 4, wayside resting places for traders, is incorrect. While Khanqahs did provide shelter and hospitality to travelers, their primary purpose was spiritual and not specifically focused on supporting traders.