The Uttar Pradesh Real Estate Regulatory Authority (UPRERA) has taken a proactive step to ensure the effective management of bank accounts associated with real estate projects. In line with the directives from the Reserve Bank of India (RBI) and the Real Estate Regulatory Authority (RERA) Act, UPRERA has penned a letter to the State Level Bank Committee (SLBC) requesting their cooperation in this endeavor.
UPRERA emphasizes the need for banks and financial institutions to collaborate with them to facilitate the management of bank accounts for real estate projects in accordance with the guidelines set forth by the RBI and the RERA Act. In particular, they underscore the importance of promotor accountability in this process.
To achieve transparency and accountability in the management of real estate project funds, UPRERA is advocating for the establishment of three distinct types of accounts for all new real estate ventures. These accounts are: Collection Account, Separate Account (Project Account), and Expenditure Account.
In a bid to streamline this process, promotor responsibilities are detailed. Promotors are expected to provide UPRERA with the requisite bank account information for each real estate project. Furthermore, they must set up standing instructions with banks, stipulating that 70 percent of funds are automatically deducted from the Collection Account and allocated to the Separate Account, with the remaining 30 percent directed to the Expenditure Account. Notably, these bank accounts will be operational solely in the name of the primary promotor.
To safeguard the proper utilization of these accounts and to deter misuse, UPRERA insists that banks refrain from providing promotor debit cards, cheque books, and net banking facilities. This oversight is designed to ensure that the funds are exclusively employed in the construction and development of the respective project.
The UPRERA’s directives also include a requirement for banks and financial institutions to diligently adhere to these guidelines. Furthermore, these institutions are expected to relay the necessary information to the UPRERA office, with promotor collaboration in uploading this data onto the dedicated portal, www.up-rera.in.
Sanjay Bhoosreddy, Chairman of UPRERA, articulated the significance of these measures, stating, “We have taken the initiative to ensure that these funds are utilized exclusively for construction purposes, establishing a transparent system for the management of project-related bank accounts. Both banks and promotor cooperation is crucial in achieving the desired transparency within the project account banking system, and we are committed to these efforts.”
The UPRERA’s actions underscore their commitment to promoting transparency and accountability within the real estate industry, fostering a more secure and responsible financial environment for real estate projects in Uttar Pradesh.