MahaRERA Releases Discussion Paper On Maintenance And Operation Of Bank Accounts For Registered Projects, Invites Suggestions And Objections

The Maharashtra Real Estate Regulatory Authority (MahaRERA) has released a discussion paper addressing the maintenance and operation of bank accounts for registered real estate projects. This initiative aligns with Section 4(2)(l)(D) of the Real Estate (Regulation and Development) Act, 2016, which mandates that seventy percent (70%) of the funds collected for real estate projects from allottees must be deposited in a separate account maintained by a scheduled bank. Moreover, MahaRERA has extended an invitation to all stakeholders to provide suggestions, views, and objections regarding the proposal outlined in the discussion paper. Feedback is welcomed until April 15, 2024, and can be submitted via the designated email address: finance.suggestions2024@gmail.com. Analysis of Discussion Paper RERA Project Bank Account MahaRERA mandates the opening of three bank accounts in a single scheduled bank before project application: the Collection Account, Separate Account, and Transaction Account. This directive applies to projects registered after a forthcoming date (to be announced soon by MahaRERA), with promoters required to disclose account details upon registration. Accounts must be opened solely or jointly as indicated in the registration form. For projects involving multiple promoters, the principal promoter must establish necessary contractual or legal arrangements to ensure proper operations of RERA project accounts. A. Collection Account of the Project The promoter must maintain a “Collection Account of the Project” in a scheduled bank for each registered project. The account name should include the promoter's name and the project name. All payments from allottees, excluding taxes and pass-through charges, should be deposited here. Seventy percent (70%) of the collected amount should be transferred automatically to the “Separate Bank Account of the Project,” while thirty percent (30%) to the “Transaction account of the project.” The bank must ensure no withdrawals are allowed except through an auto-sweep facility. Details of this account must be provided in the Allotment letter and agreement for sale for communication with homebuyers. B. Separate Account of the project Promoters are required to establish and maintain a "Separate bank account of the project" in a scheduled bank for each registered project. This account serves as a repository for seventy percent (70%) of the funds received in the "Collection account of the project," facilitated through an auto-sweep facility. The nomenclature of this account should include the promoter's name and the project name, ensuring clear identification. Withdrawals and deposits into this account are governed by strict regulations. Funds from the "Collection account of the project" are transferred here to cover construction and land costs exclusively. This account is to remain unencumbered and free from third-party control, and withdrawals can only be made upon submission of relevant certificates and forms as per MahaRERA regulations. Provisions outlined in MahaRERA Circular No. 07/2017 (Clarification on CA Certificates) must be adhered to for fixed deposit arrangements. Withdrawals from the separate account must align with project completion percentages and can only be used for specified project expenditures, including land costs, development costs, interest payments, compensation to allottees, and refunds. C. Transaction Account of the project Promoters are directed to establish and maintain a “Transaction account of the Project” in a scheduled bank for each registered project. The nomenclature of this account must include the promoter's name and the project name, ensuring clear identification. This account operates with a cap, allowing only up to thirty percent (30%) of the funds collected from allottees to be deposited from the Collection account of the project. It serves as a financial instrument for expenses unrelated to land and construction costs, adhering to legal provisions outlined in the Act, Rules, and Regulations. In cases of booking cancellations, the promoter is permitted to withdraw a minimum of 30% of the allotted amount from the Transaction account of the project. Additionally, penalties incurred by the promoter can be settled using funds from this account. Reporting to Authority Promoters are required to adhere to stringent reporting requirements to regulatory authorities, ensuring transparency and compliance in real estate projects. All certificates issued by Chartered Accountants (CA) must include a Unique Document Identification Number (UDIN) issued separately for each certificate, enhancing authenticity and traceability. Additionally, promoters must submit detailed disclosures regarding secured finance obtained for the project. This includes information such as the lender's name and address, dates of borrowing and disbursement, sanctioned and...

MahaRERA Releases Discussion Paper On Maintenance And Operation Of Bank Accounts For Registered Projects, Invites Suggestions And Objections

Aryan Raj

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