author(s)
R Jayalakshmi and Gokulnath T

abstract
The many facets of financial institutions' contributions to economic development are examined in this study. Central banks, banks, and investment firms are examples of financial organisations that play a crucial role as middlemen in the economy. They effectively channel savings into profitable investments that support economic growth, making them essential to capital mobilisation. Through lending money to companies and entrepreneurs, these organisations help to boost economic activity and create jobs. With the use of a variety of tools, financial institutions diversify and mitigate risks, making risk management another essential duty. The seamless operation of transactions is further guaranteed by their participation in payment systems and financial infrastructure, which enhances overall business efficiency. Additionally, financial institutions serve as agents of inclusive development by providing services to underserved groups and encouraging financial literacy. Because microfinance organisations give underprivileged communities especially women access to financial resources, they are essential in emerging economies. Case studies from India also show how financial institutions support digital financial inclusion, infrastructure finance, and rural development. As technology changes the financial scene, organisations are adopting digital innovation to increase accessibility and efficiency. To strike a balance between innovation and stability, regulatory frameworks must change. The challenge facing financial institutions in the future is to solve governance, social, and environmental issues while promoting sustainable economic growth.