Maharashtra RERA proposes mandatory separate bank accounts for real estate developers

The Maharashtra Real Estate Regulatory Authority has floated a discussion paper that mooted that real estate developers should open three bank accounts in a single bank before they can apply to register a project.

The three accounts should be a collection account for the project, a separate account for the project, and a transaction account for the project.

Separate accounts

The promoter must main the collection account to receive all the collections from the allottees, including parking, amenities, and other charges excluding all other taxes and statutory duties. The separate bank account is where 70 per cent of the amounts realised for the project from the allottees received in the Collection Account shall be deposited. The amount deposited in this account shall solely be used to cover theconstruction and the land cost. Transaction Account is an account to be maintained by the promoter for transferring up to 30 per cent of the total collections received in the collection account of the project.

Consumer interests

According to the paper, having separate bank accounts safeguards consumer interests, ensures compliance, and promotes transparency, accountability, and financial discipline. It is also expected to ensure uniformity in the operation and maintenance of the project’s bank accounts and standardise legitimate utilisation of funds deposited in the separate bank account.

No withdrawals or debits are allowed from the collection account through cheques, debit cards, credit cards, net banking, or any other payments other than an auto sweep facility to transfer a minimum of 70 per cent to the separate bank account.

The separate bank account is also where all the unsecured and secured loans to finance the project would be deposited. It should be free from all encumbrances and not an escrow account. The amount from this can only be withdrawn by the promoter.

The money in the transaction account can be used to meet expenses other than those directly related to the land and development costs of the project.

Any changes to the bank accounts, such as from transferring from one bank or branch to another will require approval from RERA.

Once the project is complete, the separate bank account can be closed, for which an application has to be made. The promoter can withdraw any amount remaining in the account after paying all dues after approval.

The banks where the accounts are opened are responsible for flagging any suspicious transactions in the accounts to the Authority. All stakeholders must submit public comments by April 15.