Written by- Keval Valambhia , Chief Operating Officer, CREDAI-MCHI
As the real estate sector in India continues to evolve, regulatory bodies are taking steps to ensure
transparency and accountability. One such recent development is the directive from the Department
of Financial Services (DFS) under the Ministry of Finance, instructing all public sector banks to
enforce compliance with Real Estate Regulatory Authority (RERA) norms regarding the withdrawal of
funds from Escrow Accounts designated for construction purposes.
The catalyst for this directive was a recommendation from the Haryana Real Estate Regulatory
Authority (HARERA) to the DFS. HARERA emphasized the importance of aligning banking practices
with RERA guidelines to safeguard the interests of home buyers and promote responsible project
management.
Under RERA regulations, real estate developers are required to deposit 70% of funds collected from
home buyers into designated Escrow Accounts, earmarked exclusively for construction activities.
Withdrawals from these accounts are permitted only upon certification by authorized professionals
such as architects, engineers, or chartered accountants, ensuring that funds are utilized as intended
and in accordance with project timelines.
This directive underscores a significant shift towards tighter compliance measures within the real
estate industry. While aimed at promoting financial discipline and project execution efficiency, these
measures may also have implications for market dynamics.
It is crucial for stakeholders in the real estate ecosystem, including developers, financial institutions,
and regulatory bodies, to collaborate effectively in upholding these standards. This collaborative
effort not only fosters trust and transparency but also contributes to the sustainable growth of the
real estate market, benefiting all stakeholders involved.
The directive from DFS to public sector banks signifies a proactive approach towards strengthening
regulatory frameworks in the real estate sector. By adhering to RERA norms and ensuring diligent
fund utilization, the industry moves closer to achieving greater accountability and customer
satisfaction, thereby enhancing overall market stability and investor confidence.
Also read: Luxury Home Sales Above ₹50 Crore Nearly Double Yearly