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The Haryana Real Estate Regulatory Authority (H-RERA) has sent a strong warning to banks about developers' unapproved withdrawals of funds from the regulator's accounts in an effort to stop the theft of money obtained from homeowners. This warning includes the threat of legal action against banks facilitating such withdrawals, which go against established norms. To prevent any violations, the regulatory authority has ordered banks to closely monitor withdrawals. They have also been specifically directed to notify developers of the potential penalties, which might total up to 5% of the project's cost, if a violation occurs.
In a formal communication addressed to banks on February 12th, H-RERA highlighted instances where certain developers have failed to adhere to the provisions outlined in the Real Estate (Regulation and Development) Act of 2016 concerning the withdrawal of funds from the regulator's accounts. Despite these violations, banks have reportedly allowed such withdrawals to occur without ensuring compliance with the mandated regulations.
According to the stipulations of the Act, developers are required to deposit 70% of the funds collected from homebuyers for any real estate project into a separate bank account, earmarked specifically for covering land and construction costs. These funds are to be utilised solely for the intended purposes of the project.
Developers may, however, take money out of this designated account to pay for project expenses in accordance with the project's state of completion, so long as they receive confirmation from appropriate experts including architects, engineers, and chartered accountants.
By alerting developers to the potential penalties for non-compliance under Section 4 of the RERA Act, which might result in fines amounting to up to 5% of the overall project cost, H-Rera has highlighted the seriousness of the problem.
In an effort to safeguard home buyers' interests and maintain regulatory standards in fund management and utilisation, the regulatory body has taken proactive steps that demonstrate its dedication to guaranteeing transparency and accountability within the real estate industry.
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