The study aimed at financial institutions and rural development in Isingiro district with a case study of Isingiro municipality and it was guided by the following objectives; To investigate the indicators of contribution of financial Institutions in Isingiro Municipality, to analyze the extent to which financial institutions has contributed to rural development in Isingiro Municipality and to Find out the relationship between financial institutions and rural development in Isingiro Municipality. The study used a cross sectional study design. The researcher used this design because it was inexpensive and takes a short period of time to collect data only once. The study was conducted of a large population size with keen observation of ethical aspects during data collection process. The researcher employed both qualitative and quantitative approaches to investigate influence of financial institutions on rural development. After collecting data, data is raw in form, hence needs for analysis so as to facilitate meaningful generation of the information through different approached as below; Quantitative data was coded, analyzed using SPSS tool for data analysis that generates and gives quick results hence the researcher completed the research within a short period. From the findings, there was a significant relationship between Financial Institutions and rural development in Isingiro Municipality since the 0.073 was greater than 0.05 at 1% percent confident level. From the result obtained above, this meant that when people save with financial institutions, the rate of growth will improve among the population living within Isingiro Municipality. A common approach, to be followed in a large number of countries is to build linkages between these informal organizations like Sacco’s and the formal organization sectors. Through these linkages, members of the saving groups can access a wider range of formalized financial services