UP RERA has said that the bank account will be operative only in the name of main promoter and banks should ensure utilization of amount of separate account in construction and development of the particular project.
The section 4(2)(1)(D) of RERA Act 2016 states provisions to follow rule of 70-30 percent diversion of funds for the bank accounts related to real estate projects.
Apart from this, after directions of RBI, in December 2020, UP RERA had also issued a direction saying that all new real estate projects being launched from April 1, 2021, it is mandatory for promoters to maintain 3 bank accounts.
“We have taken initiative to ensure utilization of it solely in construction and make a transparent system of opening and management of bank accounts related to projects. Arrangement from banks and promoters, both, will achieve to bring due transparency in the banking system related to project accounts and we are putting all efforts to ensure this,” said Uttar Pradesh RERA Chairman Sanjay Bhoosreddy.
UP RERA has now written a letter to State Level Bank Committee (SLBC) to ensure management of bank accounts of real estate project according to the directions of Reserve Bank of India (RBI) and RERA Act.Apart from opening 3 bank accounts for all new real estate projects, UP RERA has asked SLBC to issue directions to banks and financial institutions to deduct 70 and 30 percent and not more.The authority has also said that the branch of the bank will send the information to UP RERA office and the promoter will upload it on portal.
Banks are one of the prominent stakeholders of real estate sector and their role is prominent in implementation of the RERA Act. The banks have to ensure transaction from separate account of project in equal ratio of construction being completed in the project and this has to be certified by engineer, architect and charted accountant of the promoter’s organization.