Dedicated locality research platform
Dedicated locality research platform
Enter your email address and you will receive
a link to reset your password
In a significant move to fortify the oversight and transparency of banking systems related to real estate projects, the Uttar Pradesh Real Estate Regulatory Authority (UP-RERA) has reached out to the State Level Bank Committee (SLBC). The UP-RERA has called for the diligent management of bank accounts associated with real estate ventures, adhering to the directives set forth by the Reserve Bank of India (RBI) and the RERA Act.
The UP-RERA's action is rooted in section 4(2)(1)(D) of the RERA Act of 2016, which stipulates provisions for the allocation of funds in bank accounts dedicated to real estate projects, mandating a 70-30 percent division of the funds.
Furthermore, following the directives issued by the RBI on December 14, 2020, the UP-RERA issued an additional directive on December 24, 2020. This directive made it mandatory for promoters to maintain three separate bank accounts for all new real estate projects initiated after April 1, 2021.
A spokesperson for UP-RERA told the press at the body has taken the initiative to ensure that these funds are exclusively utilized for construction and that a transparent system is in place for the opening and management of bank accounts related to projects. The collaborative efforts of banks and promoters will significantly enhance transparency in the project account banking system, and UP-RERA is fully committed to achieving this goal.
In conjunction with the requirement of three bank accounts for new real estate projects, UP-RERA has called upon SLBC to issue directives to banks and financial institutions regarding the following key points:
Promoters are to provide standing instructions to banks for the automatic deduction of 70 percent and 30 percent, with no deviation from these percentages, from the collection account. These funds are then to be deposited into separate transaction accounts. Bank accounts will only be operated in the name of the primary promoter. To ensure funds from the separate account are utilized exclusively for construction and project development, banks are prohibited from providing debit cards, checkbooks, and net banking facilities to the promoter.
In adherence to the above points, the bank branch is required to furnish information to the UP-RERA office, which the promoter will subsequently upload on the portal.
This stringent banking provision for the management of real estate project accounts is designed to promote transparency. Banks are also obligated to ensure that transactions from the separate project account occur in equal proportion to the construction progress within the project. This verification is to be carried out by engineers, architects, and chartered accountants affiliated with the promoter's organization.
UP-RERA's commitment to transparent banking practices is demonstrated through this stringent framework not only promotes transparency but also ensures that project funds are utilized in proportion to construction progress. The combined efforts of UP-RERA, banks, and promoters are poised to revolutionize the real estate project account management system, reinforcing trust and integrity in the real estate sector.
Propscience is India’s dedicated property news portal. We cover the latest events, news, trends, deals, new launches and more.
All our services and tools are completely free of cost and available 24X7!
