Several senior executives at foreign investment banks in Mumbai said 'green' concerns had clouded Coal India since its listing five years ago, and few were keen to take on a deal that could tarnish their public image.

The pressure in a country where economic growth frequently trumps environmental concerns comes at a convenient time for banks. Many operating in India are under pressure to be more selective when it comes to roles that are heavy on staff but light on returns. The government pays a fee of just 1 rupee (USD 0.015).

Banks reluctance, say people directly involved in the sale, prompted the government this week to extend the deadline for bids from banks for a third time, and could make it tougher for New Delhi to narrow the fiscal gap. The Department of Disinvestment, which oversees stake sales in state firms, has not given a reason for the extensions.

"This time, the pressure from groups like Greenpeace is very intense, and no one is in a mood to take chances on a deal where you're not going to make money anyway," said one senior investment banker at a foreign bank.

A second banker at a large European bank said he would struggle to get permission from his bosses. "The pressure is building up," he said. An official at the Finance Ministry, which oversees the disinvestment department, brushed aside concerns the share issue could be derailed, arguing environmental concerns had always been an issue for Coal India.

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