Question map
Consider the following statements : I. The Reserve Bank of India mandates all the listed companies in India to submit a Business Responsibility and Sustainability Report (BRSR). II. In India, a company submitting a BRSR makes disclosures in the report that are largely non-financial in nature. Which of the statements given above is/are correct?
Explanation
Statement I is incorrect. The Securities and Exchange Board of India (SEBI) - not the Reserve Bank of India - has mandated the top 1,000 publicly listed companies (by market capitalisation) to make annual ESG disclosures under the Business Responsibility and Sustainability Report (BRSR) framework.[1] Therefore, the mandate comes from SEBI, not RBI, and applies only to the top 1,000 listed companies, not all listed companies.
Statement II is correct. BRSR reporting is a comprehensive framework that seeks to promote sustainable business, responsible management of the environment, and corporate governance.[2] The BRSR framework focuses on Environmental, Social, and Governance (ESG) disclosures, which are predominantly non-financial in nature, covering aspects like environmental impact, social responsibility initiatives, and governance practices rather than traditional financial metrics.
Since only Statement II is correct, the answer is option B.
SourcesPROVENANCE & STUDY PATTERN
Full viewThis is a classic 'Regulator Swap' trap disguised as a technical question. The difficulty isn't the acronym (BRSR), but spotting the jurisdictional error: RBI regulates banks, while SEBI regulates listed companies. It's a Current Affairs topic (ESG norms) tested on static polity/economy logic.
This question can be broken into the following sub-statements. Tap a statement sentence to jump into its detailed analysis.
- Statement 1: Does the Reserve Bank of India mandate that all listed companies in India submit a Business Responsibility and Sustainability Report (BRSR)?
- Statement 2: Do companies submitting a Business Responsibility and Sustainability Report (BRSR) in India make disclosures that are largely non-financial in nature?
- Specifies which regulator (SEBI) mandated BRSR disclosures, not the Reserve Bank of India.
- Makes clear the scope: the mandate applies to the top 1,000 publicly listed companies (by market cap).
- States that SEBI replaced the earlier BRR with BRSR.
- Explicitly notes the BRSR mandate applies to the top 1,000 listed entities.
- Confirms the reporting requirement applies to the top 1,000 listed companies and is specified by SEBI.
- Supports that the obligation comes from SEBI's reporting format, not from the Reserve Bank of India.
Mentions a Committee constituted to review and update the Business Responsibility Reporting (BRR) formats for listed as well as unlisted companies — showing BRR/BRSR is a topic handled via specific reporting formats and committee review.
A student could follow this clue to check which regulator or ministry constituted that committee or issued the BRR/BRSR formats (to see if it was RBI or another regulator).
Defines the Reserve Bank of India's regulatory scope with respect to banks (Scheduled Commercial Banks) and obligations RBI imposes on banks — indicating RBI's primary remit is banking-sector regulation.
A student could use this to infer that mandates applying to 'all listed companies' (a broader corporate population) might come from a regulator with corporate-market jurisdiction rather than from RBI, and thus check which regulator governs listed companies' disclosure rules.
Shows RBI issues mandates to banks (e.g., priority sector lending percentages) — illustrating RBI does issue broad compulsory rules, but typically targeted at banks.
A student could combine this pattern (RBI mandates banks) with the fact that 'listed companies' are a broader, different group and therefore should verify whether RBI's mandate practice extends beyond banks to all listed firms.
Gives an example of an RBI directive ('Storage of Payment System Data') directed at payment system providers — demonstrating RBI can and does issue operational directives to entities within its supervisory scope.
A student could use this to check whether BRSR is addressed to entities in RBI's supervisory scope (e.g., banks, payment providers) or to the wider set of listed companies.
Describes a committee (P J Nayak) and recommendations for bank governance review — another example of sector-specific committees and reforms focused on banks, not all listed companies.
A student could extrapolate that governance/reporting mandates are often developed via sectoral committees and therefore seek which committee or regulator produced the BRSR requirement for listed companies.
- Explicitly states BRSR requires annual ESG disclosures, indicating focus on environmental, social and governance (non-financial) information.
- Connects the BRSR framework to ESG reporting rather than financial metrics.
- Says top companies must furnish initiatives from an Environmental, Social and Governance (ESG) perspective, showing the reports capture non-financial initiatives.
- Specifies SEBI’s reporting format is used to collect ESG (non-financial) information.
- Describes BRSR as a framework to promote sustainable business and responsible management of the environment and corporate governance—areas that are non-financial.
- Frames BRSR as concerned with sustainability and governance rather than financial reporting.
Mentions a committee to review and update Business Responsibility Reporting (BRR) formats, showing an explicit regulatory focus on business responsibility reporting frameworks.
A student could infer that such updated BRR/BRSR formats likely emphasize non-financial topics (responsibility, sustainability) and check the formats for non-financial items.
Defines Corporate Social Responsibility (CSR) as integrating social and environmental concerns into business operations — examples of non-financial disclosure topics.
Combine this definition with knowledge that BRSR is a responsibility/sustainability report to suspect BRSR includes CSR-type (non-financial) disclosures and then verify specific BRSR headings.
States India mandated CSR spending by companies in 2014, indicating a statutory expectation of reporting or action on social activities beyond financial metrics.
Use this to reason that mandated CSR obligations would be reported in corporate responsibility/sustainability reports (non-financial disclosures) and check BRSR content for CSR items.
Notes SEBI's disclosure regulations (ICDR) and its active role in updating disclosure requirements, implying regulators require broader disclosure practices.
A student could infer that SEBI-driven disclosure regimes may include non-financial reporting (e.g., responsibility/sustainability) and look at SEBI/BRSR guidance for non-financial fields.
Lists Corporate Social Responsibility and Companies Act among recent industrial/firm-level reforms, linking company law to CSR and governance disclosures.
From this, infer that company-law-driven CSR and governance topics are likely reflected in BRSR as non-financial disclosures and then inspect BRSR sections on governance/CSR.
- [THE VERDICT]: Trap (Regulator Swap). While BRSR is a specific term, the error in Statement I is fundamental (RBI vs SEBI).
- [THE CONCEPTUAL TRIGGER]: Corporate Governance and ESG (Environmental, Social, and Governance) norms within the Indian Economy.
- [THE HORIZONTAL EXPANSION]: Memorize the 'Reporting Regime': SEBI → BRSR (Top 1000 listed cos); MCA → CSR (Sec 135, Companies Act); RBI → Financial Stability Report; Global → GRI Standards & TCFD; Niti Aayog → SDG India Index.
- [THE STRATEGIC METACOGNITION]: When reading about a new mandate (like BRSR), apply the 'Who-Whom' filter. Who issued it? (Regulator). To whom does it apply? (Target). If the target is 'Listed Companies', the regulator is almost always SEBI, not RBI.
Whether BRR/BRSR applies to listed versus unlisted companies determines if a regulator could claim mandate over all listed firms.
High-yield for UPSC: helps distinguish scope of corporate reporting regimes and prevents misattributing coverage to the wrong regulator. Connects to corporate governance and disclosure topics and enables answers about which classes of companies are covered by specific reporting frameworks.
- Indian Economy, Nitin Singhania .(ed 2nd 2021-22) > Chapter 21: Sustainable Development and Climate Change > SUSTAINABLE CLIMATE FINANCE > p. 601
The Reserve Bank issues mandates primarily for banks (e.g., priority sector lending and obligations of Scheduled Commercial Banks), not general corporate disclosure frameworks.
Important for aspirants to separate central bank powers from other regulators' roles; useful across questions on financial regulation, institutional jurisdictions, and policy mandates. Helps eliminate incorrect attributions of corporate-reporting mandates to the RBI.
- Indian Economy, Nitin Singhania .(ed 2nd 2021-22) > Chapter 8: Financial Market > Priority Sector Lending > p. 240
- Indian Economy, Nitin Singhania .(ed 2nd 2021-22) > Chapter 7: Money and Banking > COMMERCIAL BANKS > p. 174
Corporate social responsibility and committees have driven the evolution and review of responsibility-reporting formats for companies.
Useful for questions on policy formation and regulatory change — committees and voluntary guidelines often precede formal mandates. Links to governance, corporate accountability, and sustainability reporting themes in the exam.
- Indian Economy, Nitin Singhania .(ed 2nd 2021-22) > Chapter 21: Sustainable Development and Climate Change > SUSTAINABLE CLIMATE FINANCE > p. 601
Corporate Social Responsibility frames company actions around social and environmental concerns rather than purely financial outcomes.
High-yield for UPSC because CSR links governance, ethics, and sustainable development across polity, economy and environment topics. Mastering this helps answer questions on corporate governance, statutory CSR obligations, and sustainability reporting frameworks.
- Indian Economy, Nitin Singhania .(ed 2nd 2021-22) > Chapter 12: Indian Industry > CORPORATE SOCIAL RESPONSIBILITY > p. 391
Business Responsibility Reporting formats have been reviewed and updated, showing regulatory attention to how companies disclose responsibility-related information.
Important for questions on regulatory reform and corporate disclosure: understanding that reporting formats evolve clarifies how non-financial disclosures are institutionalised and monitored. It connects to SEBI/Companies Act reporting obligations and regulatory governance themes.
- Indian Economy, Nitin Singhania .(ed 2nd 2021-22) > Chapter 21: Sustainable Development and Climate Change > SUSTAINABLE CLIMATE FINANCE > p. 601
SEBI's disclosure regulations expand company reporting requirements and strengthen monitoring of corporate disclosures to protect investors.
Useful for UPSC because regulator-driven disclosure reforms link capital markets, corporate governance and investor protection. Knowing SEBI's role enables answers on financial regulation, market transparency, and disclosure regimes.
- Indian Economy, Nitin Singhania .(ed 2nd 2021-22) > Chapter 9: Agriculture > SEBI and Capital Market Reforms > p. 274
Since BRSR applies to the 'Top 1000 listed companies by market cap', the next logical question is on the 'Social Stock Exchange' (SSE). Note that SSE is regulated by SEBI, and Zero Coupon Zero Principal (ZCZP) instruments are used there.
Apply the 'Jurisdiction Filter'. Statement I says 'RBI mandates... listed companies'. RBI's domain is Banks/NBFCs/Monetary Policy. SEBI's domain is Listed Companies/Stock Markets. A mandate for 'all listed companies' coming from RBI is structurally incorrect. Eliminate I.
Links to GS-4 (Corporate Governance & Ethical Capitalism) and GS-3 (Environment - Green Finance). BRSR is the operationalization of 'Gandhian Trusteeship' in modern markets.