PSU banks fail to enter S&P ESG India Index

The exclusion of most of the state-run banks from the Standard & Poor's (S&P) Environmental and Social and Governance (ESG) India Index has earned flak from bankers who said the public sector lenders spent a lot of money on social responsibilities.

The index, which lists 50 domestic companies meeting the ESG standards, has been compiled by global rating agency Standard & Poor's, Crisil and KLD Research and Analytics, was released last week.

While the index lists most blue-chips, only Punjab National Bank and Andhra Bank, amongst PSBs, have made it to the list from around 27 state-owned lenders.

Subir Gokarn, chief economist, S&P, said: "Around 500 companies listed on the National Stock Exchange (NSE) were passed through a two-stage screening process. Various parameters including the liquidity of the companies were examined."

S&P claimed that the index was the first investable index of companies in India, whose business strategies and performance demonstrate a high level of commitment to meet ESG standards.

Meanwhile, the exclusion of state-owned banks from the index has raised many eyebrows, prompting them to question its credibility.

"It is the PSB banks in the country which do a phenomenal job when it comes to ESG activities. Nobody will believe in the outcome of such surveys, coming without proper research," the chairman of a leading public sector bank, said.