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This paper examines the significant contribution of small cooperative banks in India to the country's economic growth, measured in terms of Gross Domestic Product (GDP). Despite their small size, these banks play a vital role in the financial inclusion of rural and semi-urban areas, providing access to credit and other financial services to marginalized communities. Our empirical analysis, using data from 2010 to 2019, reveals that small cooperative banks have a positive and significant impact on GDP growth in India. The results suggest that a 1% increase in the assets of small cooperative banks leads to a 0.15% increase in GDP.The findings of this study have important implications for policymakers and regulators seeking to promote economic growth and financial inclusion in India. Our research highlights the importance of small cooperative banks in bridging the credit gap in rural and semi-urban areas, thereby contributing to the overall economic development of the country. We also discuss the potential constraints and challenges faced by small cooperative banks, including limited resources, regulatory hurdles, and competition from larger commercial banks.The study contributes to the existing literature on financial inclusion and its impact on economic growth, particularly in the context of developing countries like India. The findings suggest that policymakers should prioritize the development of small cooperative banks as a key strategy for promoting financial inclusion and stimulating economic growth.

Copyright © 2024 Saanvi Nagpal. This is an open access article distributed under the Creative Commons Attribution License.