This paper assesses the impact of financial institutions on the economic development of Botswana. As it is not sensible to depend on a single mineral (diamonds) for long-term economic development the Government of Botswana is shifting its economic emphasis towards the development of financial institutions. It is apparent that the influence of financial institutions is more on household than development activities. Hence, the Government of Botswana entered into banking activities. Government's realisation of the need to separate its banking functions prompted the establishment of the Botswana Stock Exchange to float the capital market and the Banking Act. In spite of all these actions, the much-needed assistance is not forthcoming from financial institutions. Hence the development of a suitable legal framework to channel deposits for the development purpose is suggested.