Home Real Estate Banks to ensure builders comply with RERA norms when handling public money

Real Estate

Banks to ensure builders comply with RERA norms when handling public money

March 11, 2024

RERA norms state that developers must deposit 70 percent of the amount collected from buyers in an escrow account, which can be used only for construction of the project

Gurugram: Following a recommendation from the Haryana Real Estate Regulatory Authority (HRERA), Gurugram, the department of financial services (DFS) under the Union finance ministry has asked all public sector banks to ensure that real estate developers comply with public norms related to withdrawal of funds from the escrow accounts, meant for construction of buildings.

HRERA Gurugram chairman, Arun Kumar, when asked about the matter said that they had observed in many cases that money had been withdrawn from escrow accounts in violation of rules. (HT File Photo)

According to RERA norms, developers must deposit 70 percent of the amount collected from homebuyers in an escrow account, which can be used only for construction of the project and related expenses. The money can be withdrawn from the account only after certificates are obtained from the architect, engineer and chartered accountant.

Hindustan Times – your fastest source for breaking news! Read now.

The department of financial services in its letter to banks written on March 8 said that as informed by the chairman, HRERA, it has come to the notice of the authority that some promoters are not complying with the provisions of RERA Act 2016 with regard to withdrawal from RERA account such as submission of CA, architect and engineer’s certificate prior to withdrawal from the RERA account. Banks are allowing withdrawal without ensuring the compliances, which is a clear violation of the RERA Act.

“Chairman HRERA has requested MoHUA to take up this matter with DFS for issuing instructions to all banks dealing with RERA accounts to comply with the provisions of the RERA Act, 2016. All banks are requested to ensure compliance with the provisions of the RERA Act in connection with withdrawal from RERA A/Cs,” the letter said.

HRERA Gurugram chairman, Arun Kumar, when asked about the matter said that they had observed in many cases that money had been withdrawn from escrow accounts in violation of rules. “The banks must ensure that norms are followed by developers while withdrawing money from the escrow accounts,” he said.