The study examine the influence of financial risk on the nature of the relationship between ESG and the financial performance of Indian banks. In India, loans are key financial products of banks that are exposed to carbon-intensive sectors, which hinder their efforts to mitigate against transition risks and global ESG standards, amid the growing pressure from international investors. The study uses ROA to measure financial performance. The independent variable ESG was measured using the ESG scores Indian banks indexed in the NIFTY 100 ESG Index. Altman's Z-score model which predicts the financial risk of Indian banks was considered as the mediating variable to assess its influence on the nature of the relationship between ESG and financial performance. The evidence from the study would be useful to identify the changes in the financial performance of Indian banks resulting from their sustainable performance.