Financial inclusion has been one of the most debated areas of the development process in many developing countries, particularly in Sri Lanka, for many years but has not yet been adequately addressed. In Sri Lanka, there has been a gentle increase in the density of economic institutions since 1990. In line with the survey on GN divisions (2009/10), the common was 4.2 financial institutions per GN division. From time to time, there are some initiatives taken by the Central Bank regarding financial inclusion. Therefore, the purpose of this study is to analyse the relationship between financial inclusion and rural development. This study used the quantitative approach and secondary data, spanning annually from 1996 to 2019. The Autoregressive Distributed Lag (ARDL) model was performed to test the constructs' hypothesised relationship using the EViews 11 student version. According to the ARDL results, the study reports a positive relationship between financial inclusion and rural development. Cooperative banking as an institution plays an incredibly significant role in achieving the objective of a countless degree of financial inclusion in the country by bringing together people's resources with small means and providing them with access to different financial services. These banks provide the credit requirement of people with a limited resource mobilisation scope living in rural areas with considerably higher social responsibility. Cooperative banks may encourage modernisation by facilitating the dissemination of new technologies, mobilising self-help, and motivating people to use their self-help potential better. Thus, offering an economic future for rural youth in the country. Further, it revealed that despite the substantial improvement of rural development over the period from 1996 to 2019. It is expected that the findings of this study help various level policymakers to address the issues relating to rural development and financial inclusion from a novel and different perspective. Future studies may investigate the modernisation facilities considering what extent that help to improve the financial inclusion in the country and for the continued sustainable development in Sri Lanka as a whole.
Keywords: Financial Inclusion, Rural Development, Sri Lanka