The exclusion of most of the state-run banks from the Standard & Poor's Environmental and Social and Governance India Index has earned flak from bankers who said the public sector lenders spend a lot of money on social responsibilities.
The index, which lists 50 domestic companies meeting the ESG standards, 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.
"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's Chief Economist Asia Pacific Subir Gokarn said.
S&P claimed that the index is the first investable index of companies in India, whose business strategies and performance demonstrate a high level of commitment to meet ESG standards, he said.
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, told.