Uttar Pradesh Real Estate Regulatory Authority (UP-RERA) has issued detailed real estate project banks account directions to ensure effective protection the interest of the consumers and utilization of funds strictly as per RERA Act as a guarantee for completion of projects.
UP-RERA prohibits promoters from creating lien on the separate account of the project, further prohibiting them from paying any interest or penalty or assured return from this account.
Sanjay Bhoosreddy, chairman, UP-RERA said, “the disclosure of three accounts by the promoter on the web portal of U.P. RERA and proper utilization of funds, more particularly of the funds deposited in the separate bank account of the project, will take care of the time bound completion of the project and the rigorous control mechanisms will ensure transparency and accountability in the management of the accounts of the project. And that any violation of these directions shall be heavily penalized.”
Every project will have a collection account for taking payments from allottees and the promoter must disclose this account in its advertisements, in the allotment letter, agreement for sale and all communications with the allottees.
The promoter must provide standing instructions to the bank for auto-sweep of not less than 70 percent of the amount from the collection account to the separate account and not more than 30 percent to the transaction account of the project.
The promoter must submit the particulars of the three bank accounts, namely the collection account, the separate account and the transaction account with registration application of the project. The money from the separate account can be used only for payment of the cost of land, construction and development of the project. The promoter can pay normal interest against the project loans but no penal or compound interest or interest and compensation payable to the allottees.
All the secured and un-secured loan amount to finance the project must also be deposited in the separate account. No withdrawal from the separate account without submission of the certificates issued by the chartered accountant, the engineer and the architect to the bank and cannot be more than the verified cost of the work completed.
Bhoosreddy added that the authority will be more strict in case of rehabilitation of a project as per section-8 of the RERA Act and in such cases the promoter shall have to deposit 100 percent of the money collected from the allottees as well as all the money raised through loan for construction and development work in the separate account of the project. The promoter must also be required to inform all the allottees of the project about making the payments in the separate account only.
