Greater Noida: Now, bank third party to handle escrow account for realty project

The move came in a bid to contain fund diversion by the developers, as alleged by many homebuyers during a board meeting held by the Greater Noida authority on September 24

The Greater Noida authority has directly engaged the bank concerned in handling an escrow account opened for a realty project in the city, officials said on Monday.

Now, an escrow account opened for a realty project in Greater Noida will be managed by three parties -- the authority, the developer, and the bank concerned. (Sunil Ghosh/HT)

Now, an escrow account will be managed by three parties -- the authority, the developer, and the bank concerned. The move came in a bid to contain fund diversion by the developers, as alleged by many homebuyers during a board meeting held by the Greater Noida authority on September 24, they added.

“Earlier, an escrow account was only controlled by the authority and the developer. But now, the bank concerned will become an operator, who will keep a track of the funds collected from a particular realty project. The move is aimed at monitoring funds collected from homebuyers so that it is spent on construction and other essential works. We want to ensure that the pending projects are completed at the earliest,” said Santosh Kumar, officer on special duty, Noida authority.

At present, 200 projects are ongoing in Greater Noida, where thousands of housing units have been proposed, said the officials.

Earlier, following the Uttar Pradesh government’s order, the Greater Noida authority had given an additional time to the developers to complete and deliver flats to the homebuyers amidst the Covid-19 crisis, pushing the deadline from June to December 31 this year. “If the developers fail to do so, the authority will impose penalties against them,” Kumar added.

Homebuyers, however, said that the Greater Noida authority delayed the move by a few years.

“If the Uttar Pradesh government or the Greater Noida authority had introduced the escrow account scheme six to seven years ago, the developers would not have been able to misuse the funds of the homebuyers. The escrow account method could have saved thousands of homebuyers as it contains the developers from diverting the funds collected in a realty project. Let’s see how this move helps all,” said Abhishek Kumar, president of Noida Extension flat owners’ welfare association.

The confederation of real estate developers’ association of India (CREDAI), a realtor group, has also welcomed the move. “The Greater Noida authority’s decision to engage three parties in escrow was a much-needed step, as it will help in restoring the faith of the homebuyers into the system and the realty sector,” said Prashant Kumar Tiwari, president of CREDAI’s western Uttar Pradesh chapter.