The Maharashtra Real Estate Regulatory Authority (MahaRERA) recently released a discussion paper suggesting a new requirement for real estate developers. According to the paper, developers would have to open three bank accounts in a single bank before they could apply to register a project. This proposal aims to safeguard consumer interests, ensure compliance, and promote transparency, accountability, and financial discipline in the real estate sector.
The Three Bank Accounts: Promoting Standardization and Trust
The discussion paper outlines the details of the proposed three-bank account system. The first account is a collection account, where all collections from the allottees will be deposited. This account will exclude any taxes or statutory duties and will also cover charges for amenities and parking. The second account, called the separate account, will receive 70% of the amounts realized for the project from the allottees. The funds within this account will be used exclusively for construction and land costs.
Ensuring a Well-Regulated Financial System
The rationale behind maintaining separate bank accounts lies in ensuring uniformity, compliance, and responsible utilization of funds deposited in the separate bank account. To avoid any misuse of funds, the collection account will have restrictions on withdrawals and debits. Only an auto-sweep facility transferring a minimum of 70% to the separate bank account will be allowed. This measure prevents developers from accessing sensitive allottee funds for other purposes.
A Transparent Financial Ecosystem
Additionally, the paper highlights the importance of the transaction account, responsible for handling up to 30% of the total collections received in the collection account. Developers can utilize the funds in this account for meeting expenses not directly related to land and development costs of the project. However, the account must remain free from encumbrances and can only be accessed by the promoter.
Streamlining the Closing Process
Once the project is complete, the separate bank account can be closed, provided a formal application has been submitted. This process allows the remaining funds in the account, after clearing all dues, to be withdrawn by the promoter. However, any changes to these bank accounts, such as transferring to a different bank or branch, will require approval from MahaRERA to maintain transparency and oversight.
Deadline for Public Comments and Bank’s Oversight Role
MahaRERA has set a deadline for stakeholders to submit public comments on this proposal. All inputs must be received by April 15, 2023, ensuring that a wide range of perspectives are considered before the final implementation. Furthermore, the banks where these accounts are opened will play a significant role in the oversight of the transactions. They will be responsible for flagging any suspicious activities or transactions related to these accounts to ensure that all operations meet regulatory standards. By involving banks in the monitoring process, MahaRERA aims to create a more robust regulatory framework for the real estate industry in Maharashtra.
This three-bank account system, if implemented, is expected to bring about a significant transformation in the real estate sector, promoting accountability and standardization. It will instill confidence among consumers, as segregation of funds from different projects will prevent diversion and ensure that only legitimate utilization of funds takes place.
In conclusion, MahaRERA’s proposal to introduce a three-bank account system for real estate developers reflects their commitment to regulating the industry effectively. The benefits of this system include increased transparency, safeguarding consumer interests, and enhancing accountability. It is now up to stakeholders to provide their valuable feedback and contribute to shaping a vibrant and well-regulated real estate market in Maharashtra.
