Noida Authority has taken a decisive step towards recovering pending dues from real estate developers by urging them to open escrow accounts. The move comes as a measure to prevent builders from diverting funds to other projects or ventures, which has led to delays in several real estate projects in the region.
According to officials familiar with the matter, the Noida Authority expects to collect more than Rs 7,000 crore in pending dues through the implementation of these escrow accounts. The accounts will be jointly operated by the builders and the Authority, ensuring transparency and making it challenging for builders to misuse funds.
Swatantra Kumar, Chief Finance Controller at Noida Authority, emphasized that the primary objective behind this initiative is to discourage the misappropriation of funds by builders and to facilitate the realization of dues from developers. Currently, there are 59 promoters in Noida who are required to open escrow accounts. These non-litigated dues towards the Authority have accumulated over time, leading to financial challenges.
Explaining the mechanism, Kumar clarified that 50 percent of the total collections from a project should be deposited into the escrow account. This means that if a promoter collects Rs 100 crore from buyers for a project, Rs 50 crore will be put into the escrow account, enabling the Authority to retrieve its payment. The specific amount to be deposited into the escrow account will vary depending on the outstanding dues against a project and the amount to be collected from buyers.
The concept of escrow accounts was initially introduced in 2018, aiming to ensure that funds collected from homebuyers were utilized appropriately and to prevent project delays. However, it was not effectively implemented at that time. Now, the Noida Authority is taking a more assertive approach, pressuring each promoter to open an escrow account promptly. Notices will also be issued to promoters of delayed projects, urging them to comply with this requirement to facilitate effective project delivery and debt recovery.
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