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MahaRERA Seeks to Mandate Three Bank Accounts for Projects

The Maharashtra Real Estate Regulatory Authority has put forth a proposal to mandate promoters to open three separate bank accounts in a single scheduled bank, for each project.

Attention is drawn to Section 4(2)(l)(D) of the Real Estate (Regulation and Development) Act, 2016, which requires promoters to give a declaration, while applying for registration of the real estate project, stating that 70% of the amount received from the allottees from time to time, will be deposited in a separate account, to be used towards construction and land costs.

However, the discussion paper dated March 15, 2024, envisages the creation of three separate bank accounts, namely:

  • Collection Account

All amounts received from allottees must be deposited in the collection account. Here, stamp duty registration charges, GST, and other indirect taxes and pass-through charges are excluded.

No withdrawals will be allowed from this account. With the help of an auto sweep facility, a minimum of 70% of the collected amount will be transferred to the separate account, and an amount not exceeding 30% of the collected amount will be transferred to the transaction account.

To ensure that all collections from homebuyers are deposited in the collection account, the discussion paper seeks to mandate promoters to incorporate details of the collection account in the allotment letter, agreement for sale, etc.

  • Separate Account

As mentioned above, 70% of the collected amount is to be transferred to the separate account of the project, through the auto sweep facility. The amount deposited in the separate account can be used only for limited purposes. Such an amount can be used to cover land costs, construction costs, and interest on loans. Additionally, it can be used to make payment of interest, compensation, or refund to allottees.

An obligation is cast on the banks to ensure that both the collection account and the separate account are “free from all encumbrances and should not be escrow account and free from lien, loans, and third-party control i.e lender/ bank/ financial institution and cannot be attached by any other government authority/body”.

  • Transaction Account

The other expenses can be met using the money in the transaction account.

Any change or transfer of accounts from one branch or bank to another would require prior approval of the authority. A promoter seeking to close the separate bank accounts has to submit an online application accompanied by the occupancy certificate or completion certificate along with such other documents as prescribed.

It is also stated that failure on the part of the promoter to comply with the directions will result in the imposition of penalty which may extend up to 5% of the cost of the real estate project.

The concerned stakeholders may share their views on the proposals by April 15, 2024.

 

Date: March 20, 2024