Ensure financial discipline: MahaRERA to developers

Come July 1 developers in Maharashtra will not be able to take money from homebuyers and deposit in different bank accounts as it will become mandatory for them to maintain different designated bank accounts for purposes as stated by the Maharashtra Real Estate Regulatory Authority MahaRERASo far several developers have been asking homebuyers to draw payments towards different bank accounts for different purposes For example flat booking amount is deposited in one bank account and another bank account for amenities and infrastructure such as gymnasium swimming pool parking etcOpening of single bank accountAccording to MahaRERA officials ldquoTo discontinue this practice and enforce discipline ensure compliance enhance efficiency transparency accountability and uniformity in financial operations of housing projects thereby securing and protecting homebuyersrsquo investments the MahaRERA has mandated developers to open three bank accounts in a single bank These include 1 lsquoRERA Designated Collection Accountrsquo for 10037 of revenue from the flat buyer 2 lsquoRERA Designated Separate Accountrsquo for 7037 of funds allocated for projectrsquos land and construction and 3 RERA Designated Transaction Account for balance 3037 of fundsrdquoThis directive will be mandatory to follow and effective from July 1 2024 Relevant consultation paper was issued in midMarch to discuss the same with various stakeholders Following extensive consultation and discussion these measures will now be implementedProjects with more than one promoter will also have the flexibility to open a lsquoRERA Designated Master Accountrsquo to receive all collections from the homebuyersSection 42iD of the Real Estate Regulation and Development Act 2016 has a provision for dedicated bank accounts This is to ensure transparency financial discipline and better monitoring of transactionsldquoIt is mandatory to segregate 10037 of the revenue that is the amount related to apartmentrsquos booking and other charges excluding government taxes and charges received from the homebuyers Thereafter a minimum of 7037 of the revenue will have to be transferred to another account ie RERA Designated Separate Account solely for land and construction expenditures The balance 3037 of the revenue can be transferred to the RERA Designated Transaction Account Banks will facilitate this process through auto sweep Funds in any of these accounts cannot be withdrawn via cheques online banking credit cards debit cards or any other meansrdquo a media statement released by MahaRERA statedWith the entire operating procedures defined for receipt expenditure and refund the developers will not be able to excuse themselves citing lack of funds from returning the booking amount to those flat purchasers who intend to exit the projectOn cancellation of registrationIf a homebuyer cancels their registration they will have to pay back 7037 of the amount received as well as compensation for any losses from RERA Designated Separate Account Interest on the amount will also be applicable Furthermore 3037 of the original amount will be transferred from the developers RERA Designated Transaction AccountOn cancellation of bookingIn case of cancellation of a flatrsquos booking the homebuyer in several instances has to take a time consuming and longer route of lodging a complaint attending hearings securing an order sending relevant documents to the district collector for issuing of recovery warrants This entire lengthy process will be shortened as funds will be available with the developer to refund and compensate the homebuyer for losses if any With bank details and funds available now MahaRERA can efficiently provide instructions for recovery from the specified account This decision will be crucial for such recoveries and prove to be a gamechangerOperate account only for project expensesFor the developer the RERA Designated Transaction Account will be utilised for project related expenses other than land and constructionRERA Designated Collection Account and RERA Designated Separate Account are legally protected from getting attached by any government agencies The bank has to be vigilant that they do not allow creating any third party encumbrances on either or both of these two accounts The collection and diversion of funds to any unauthorised accounts will be unacceptableAll transactions in these RERA designated bank accounts will have to cease upon projectrsquos completion The bank accounts cannot be used unless MahaRERA extends the project The developer cannot alter the bank account without MahaRERArsquos approvalFunds can be withdrawn only on submission of certificates from projectrsquos chartered accountants engineers and architects If there is more than one promoter their responsibilities will be as per their mutual agreement This protocol has been made for the first timeDue to several such provisions there will be restrictions on misappropriation of money transparency in fundrsquos utilisation bring in financial discipline and immensely help in projectrsquos timely completionApart from this many developers finance the project by mortgaging the land or flats or the entire project Furthermore they may divert funds from the projectrsquos account without the knowledge of homebuyers This lack of transparency could potentially lead to problems in the future for the project and buyers alike Now the promoter must declare the loans availed from any financial institutions against the mortgage of land or flats or the entire project It will be mandatory for the developer to disclose the financial institutionrsquos name address transaction date sanctioned amount withdrawn amount balance amount etc The availed loanrsquos overall details along with amount utilised for construction should be certified by projectrsquos Chartered Accountant with their UDIN number It is only after following this process a developer can be allowed to withdraw the interest on loanThe latest measure has multiple such provisions to safeguard homebuyersrsquo interestsMahaRERA Chairman Ajoy Mehta sayMahaRERA is committed to building trust among home buyers by legally empowering them to ensure their investments are secured and protected MahaRERA has highlighted the legal rights of homebuyers in the housing projects concerning various crucial aspects such as parking amenities standardised agreements for sale allotment letters etc To ensure financial discipline in project operations MahaRERA has taken a crucial decision mandating opening of three bank accounts in a single bank for each of the projects If a project involves more than one promoter four bank accounts will be required These measures will be effective from July 1 This move is aimed at having financial discipline and transparency in the managing revenue as well as expenditures related to projectrsquos development thereby enabling precise financial oversight in the real estate sector Such a measure is expected to minimise potential delays in projectrsquos completion thereby benefiting homebuyers and enhancing the real estate sectorrsquos credibility MahaRERA is committed to fostering this trust said Ajoy Mehta