MahaRERA Releases Discussion Paper On Maintenance And Operation Of Bank Accounts For Registered Projects, Invites Suggestions And Objections

Moreover, MahaRERA has extended an invitation to all stakeholders to provide suggestions, views, and objections regarding the proposal outlined in the discussion paper. Feedback is welcomed until April 15, 2024, and can be submitted via the designated email address: finance.suggestions2024@gmail.com.

Analysis of Discussion Paper

1. RERA Project Bank Account

MahaRERA mandates the opening of three bank accounts in a single scheduled bank before project application: the Collection Account, Separate Account, and Transaction Account. This directive applies to projects registered after a forthcoming date (to be announced soon by MahaRERA), with promoters required to disclose account details upon registration. Accounts must be opened solely or jointly as indicated in the registration form. For projects involving multiple promoters, the principal promoter must establish necessary contractual or legal arrangements to ensure proper operations of RERA project accounts.

A. Collection Account of the Project

The promoter must maintain a “Collection Account of the Project” in a scheduled bank for each registered project. The account name should include the promoter's name and the project name. All payments from allottees, excluding taxes and pass-through charges, should be deposited here. Seventy percent (70%) of the collected amount should be transferred automatically to the “Separate Bank Account of the Project,” while thirty percent (30%) to the “Transaction account of the project.” The bank must ensure no withdrawals are allowed except through an auto-sweep facility. Details of this account must be provided in the Allotment letter and agreement for sale for communication with homebuyers.

B. Separate Account of the project

Promoters are required to establish and maintain a "Separate bank account of the project" in a scheduled bank for each registered project. This account serves as a repository for seventy percent (70%) of the funds received in the "Collection account of the project," facilitated through an auto-sweep facility. The nomenclature of this account should include the promoter's name and the project name, ensuring clear identification. Withdrawals and deposits into this account are governed by strict regulations. Funds from the "Collection account of the project" are transferred here to cover construction and land costs exclusively.

This account is to remain unencumbered and free from third-party control, and withdrawals can only be made upon submission of relevant certificates and forms as per MahaRERA regulations. Provisions outlined in MahaRERA Circular No. 07/2017 (Clarification on CA Certificates) must be adhered to for fixed deposit arrangements. Withdrawals from the separate account must align with project completion percentages and can only be used for specified project expenditures, including land costs, development costs, interest payments, compensation to allottees, and refunds.

C. Transaction Account of the project

Promoters are directed to establish and maintain a “Transaction account of the Project” in a scheduled bank for each registered project. The nomenclature of this account must include the promoter's name and the project name, ensuring clear identification. This account operates with a cap, allowing only up to thirty percent (30%) of the funds collected from allottees to be deposited from the Collection account of the project. It serves as a financial instrument for expenses unrelated to land and construction costs, adhering to legal provisions outlined in the Act, Rules, and Regulations. In cases of booking cancellations, the promoter is permitted to withdraw a minimum of 30% of the allotted amount from the Transaction account of the project. Additionally, penalties incurred by the promoter can be settled using funds from this account.

2. Reporting to Authority

Promoters are required to adhere to stringent reporting requirements to regulatory authorities, ensuring transparency and compliance in real estate projects. All certificates issued by Chartered Accountants (CA) must include a Unique Document Identification Number (UDIN) issued separately for each certificate, enhancing authenticity and traceability.

Additionally, promoters must submit detailed disclosures regarding secured finance obtained for the project. This includes information such as the lender's name and address, dates of borrowing and disbursement, sanctioned and disbursed amounts, outstanding balances, details of any mortgages, and submission of the Central Registry of Securitization Asset Reconstruction and Security Interest (CERSAI) report for secured loans, as mandated by MahaRERA order no. 26/2021 issued on 29 Oct 2021.

3. Changing the bank accounts of the project

Changing project bank accounts from one scheduled bank/branch to another requires prior written approval from the regulatory authority, as stipulated in MahaRERA Circular No. 43/2023 issued on 20 Feb 2023. Promoters seeking to make such changes must submit the necessary documents through the correction application module on their respective login. This submission should align with the guidelines outlined in the circular, ensuring compliance with regulatory standards.

Additionally, promoters must furnish a Declaration-cum Undertaking as prescribed in Annexure-A under MahaRERA Circular No. 43/2023. This updated format will be published alongside subsequent orders, reflecting the authority's commitment to maintaining transparency and accountability in project finances. Furthermore, the Declaration about RERA project bank accounts, as outlined in 'Format-A' under MahaRERA Order No. 34/2022, will be substituted with a new format, also to be published alongside subsequent orders. These measures aim to streamline procedures and enhance regulatory oversight in managing changes to project bank accounts, ensuring integrity and compliance in real estate financing activities.

4. Changing the bank accounts of the project

Upon completion of a project and the issuance of an occupancy certificate, the promoter must initiate the closure of the Separate Bank Account of the project through the MahaRERA web portal. This process requires the submission of essential documents including Form-4 (Architect Certificate of completion) and the Occupancy Certificate/Completion Certificate obtained from the competent authority.

Additionally, an Affidavit-cum declaration/undertaking affirming the discharge of all liabilities related to refunds, penalties, and any outstanding dues imposed by MahaRERA must be provided. The promoter must also ensure compliance with Section 11(4)(g) and (h) of the Act, covering payment of statutory dues, penalties, refunds, and any pending compliances.

Upon satisfying these requirements, the promoter can withdraw the remaining balance from the Separate Account of the project with prior written approval from the regulatory Authority. This streamlined procedure ensures compliance with regulatory standards and facilitates the closure of project bank accounts upon project completion.

5. Obligations of the Banks

Banks are mandated to adhere to MahaRERA directives concerning the opening, operation, and closure of RERA Project Accounts. These guidelines apply to all projects registered under MahaRERA. For each project, banks are required to open three specific accounts – the Collection Account, Separate Account, and Transaction Account – all within the same bank. Strict adherence to the prescribed nomenclature for these accounts is mandatory.

Upon opening the accounts, banks must obtain written standing advice from promoters for the automatic transfer of funds from the Collection Account to the Separate Account and the Transaction Account in the specified proportions. Ensuring that these accounts remain free from encumbrances, lien, or third-party control is also a responsibility of the banks. Any suspicious transactions from the Separate Account must be promptly reported to the regulatory authority.

Banks must refrain from providing prohibited means of withdrawal, such as cheque books or debit cards, for the Collection Account. Upon account opening, banks are required to issue copies of a specific letter to the promoter and MahaRERA. During due diligence processes, banks must verify all project parameters available on the MahaRERA website. Withdrawals from the Separate Account cease upon project completion, unless an extension is granted by the promoter.

Upon obtaining written approval from the regulatory authority, banks can permit withdrawals from the Separate Account. In the event of any regulatory orders concerning account freezing or unfreezing, banks must promptly comply. Non-compliance with these directives by promoters may result in penalties under relevant sections of the RERA Act. These measures ensure accountability and transparency in project financing and banking operations.

No. MahaRERA/Secy/129/2024

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