The move comes after Haryana Real Estate Regulatory Authority (HARERA) made a recommendation to the secretary DFS to issue instruction to all banks to ensure compliance of RERA norms while allowing withdrawal of funds from RERA accounts by promotors of real estate projects.

March 12, 2024 / 09:55 PM IST

Haryana RERA

The Department of Financial Services (DFS) under the Union Finance Ministry has directed all public sector banks to ensure that builders comply with RERA norms related to withdrawal of funds from the escrow accounts that are meant for construction of buildings, officials aware of the matter said.

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The move comes after Haryana Real Estate Regulatory Authority (HARERA) made a recommendation to the secretary DFS to issue instruction to all banks to ensure compliance of RERA norms while allowing withdrawal of funds from RERA accounts by promotors of real estate projects.

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According to RERA norms, the real estate developers will have to deposit 70 percent of the amount collected from homebuyers in an escrow account and that can be used only for construction of the project. Officials said that the norms state that the funds can be withdrawn from such account only after certificates are obtained from the architect, engineer and chartered accountant.

In its letter to banks, the Department of Financial Services on March 8 said that as informed by the chairman, Haryana RERA, it has come to the notice 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, the letter said.

“Chairman H-RERA has requested MoHUA (Ministry of Housing and Urban Affairs) 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 accounts,” the DFS said in the letter.

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Officials at Haryana RERA said that there had been many instances where promoters had withdrawn money from RERA accounts in order to use it for purpose other than using it for construction in the same projects. As a result of it, genuine real estate projects got unnecessarily stalled for lack of funds and allottees have suffered.

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