Given India's unique institutional and regulatory environment - characterised by evolving legal frameworks, inconsistent regulatory enforcement, and relatively weak corporate governance - banks may face significant challenges in implementing effective ESG strategies. This study investigates the impact of both the overall sustainability disclosure scores and their individual components - environmental (EDS), social (SDS), and governance (GDS) - on the financial performance of 29 listed Indian banks, using ROA and ROE over the period 2015-2022. To mitigate endogeneity, such as reverse causality and omitted variable bias, the two-step system GMM is employed. The findings reveal a positive relationship between ESG disclosure scores and financial performance, supporting the stakeholder, resource-based view, and signalling theory. EDS and GDS are found to be statistically significant, while SDS is not. Robustness checks using an alternative proxy validate the findings. These results offer insights to various stakeholders, underscoring the importance of promoting transparent and responsible ESG practices within the banking sector.