Mumbai: The Maharashtra Real Estate Regulatory Authority (MahaRERA) has issued draft guidelines proposing maintaining three bank accounts – collection, separate and transaction – in the same scheduled bank to ensure compliance, efficiency, transparency, accountability, and appropriate utilisation in home buying.
So far, the developers make payments and transfers from the same bank account where they collect revenue from the flat purchasers. This makes maintaining financial discipline challenging and complicating oversight.
According to MahaRERA, the collection account will help maintain all revenue from the allottees from time-to-time and any other charges, excluding all taxes and statutory duties. In the separate account 70% of the revenue realised from the project will be transferred from the collection account. This amount will be solely used to cover land and construction cost, loan interest, refunds as well as compensation of up to 70% to the buyer.
The transaction account will have up to 30% of the revenue received in the collection account. This will be to meet expenditures other than land and construction costs, such as cancellation of any booking wherein the developer will be able to withdraw a minimum of 30% required to be paid to the allottees. Even the penalties on the promoter can be paid from the transaction account.
As per an official statement on Tuesday, it will be the bank's obligation to ensure that fund withdrawal does not happen from the collection account using traditional banking methods; only an auto-sweep facility can be used.
As per the statement, “These accounts are to be registered in the developer’s and project’s names. While doing due diligence for opening and operating a project’s account or financing a real estate project, the banks will have to verify every parameter available on the MahaRERA website.”
MahaRERA chairman Ajoy Mehta said, “In the pursuit of timely housing project completion and bolstering transparency and accountability within the sector, MahaRERA’s discussion paper on the accounts seeks to have a systematic policy framework on utilisation of funds, thereby guaranteeing their targeted allocation and distribution.”
MahaRERA’s proposal doesn’t stop there. The bank accounts maintained will have to be free from all encumbrances and should not be an escrow account and free from lien, loans, and third-party control – lender or bank or financial institution – and cannot be attached by any other government authority unless a direction is issued by MahaRERA.
Given the impact on real estate stakeholders, the latest discussion paper on the subject is available on MahaRERA website. Suggestions, views and objections from all the stakeholders will be accepted until April 15, to be sent on finance.suggestions2024@gmail.com.
As per the proposal, it will be mandatory for the developer to furnish details of the collection account in the allotment letter and in the agreement for sale as well as any other communication with the homebuyers to receive payments towards the booking made.
Furthermore, developers are required to disclose mortgage details and provide updated completion certificates certified by project accountants with Unique Document Identification Number (UDIN) numbers to prevent future complications.
