The Union finance ministry on Friday asked the public sector banks to ensure compliance of provisions of the Real Estate (Regulation and Development) Act with regards to the withdrawals made by real estate developers from the escrow bank accounts.
Acting on a missive by chairman of the Haryana Real Estate Regulatory Authority, Gurugram, the instructions were issued to chairman of State Bank of India and managing directors of all public sector banks by the department of financial services under the Union finance ministry.
As per the Act, 70% of the amount realised for the real estate project from allottees has to be deposited in a separate account to be maintained in a scheduled bank to cover the cost of construction and the land cost and shall be used only for that purpose. The promoter can withdraw the amount from a separate account to cover the cost of the project in proportion to the percentage of completion of the project. However, the amount from the separate account can be withdrawn by the promoter only after it is certified by an engineer, an architect and a chartered accountant in practice that the withdrawal is in proportion to the percentage of completion of the project.
The promoter is also required to get his accounts audited within six months after the end of every financial year by a chartered accountant and produce a statement of accounts duly certified and signed by a chartered accountant.
{{/usCountry}}The promoter is also required to get his accounts audited within six months after the end of every financial year by a chartered accountant and produce a statement of accounts duly certified and signed by a chartered accountant.
{{/usCountry}}“As informed by the chairman, Haryana Real Estate Regulatory Authority, it has come to notice that some promoters were not complying with the provisions of the Real Estate (Regulation and Development) Act with regard to withdrawal from the RERA bank accounts such as submission of certificates by chartered accountant, engineer and architect prior to the withdrawal from the bank account. The banks were also allowing withdrawals without ensuring these compliances, which is a clear violation of the Act. The chairman, Haryana real estate regulatory authority, has as requested the Union ministry of housing and urban affairs to take up this matter with department of financial services for issuing instructions to all banks dealing with RERA accounts to comply with the provisions of Act,” said the instructions issued by the Union finance ministry.