RERA for Protecting Homebuyers: Ensuring Fair Use of Funds

In response to concerns raised by Gurugram RERA Chairman Arun Kumar, the Union Finance Ministry has taken steps to safeguard homebuyers’ interests. They’ve instructed public banks to prevent misuse of RERA funds, ensuring developers follow rules and are transparent in using the money.

The recent orders tell banks to follow rules strictly, stopping developers from taking out money from the regulator’s account without permission. This is important because some developers weren’t following the rules before.

Earlier in February, the RERA Chairman told banks to stop any illegal withdrawals. He said some developers were leaving projects halfway and using the money for other things, which isn’t allowed. The RERA Act says 70% of the money collected for a project must go into a separate bank account for land and building costs. Developers can take money out of this account only if the project is progressing well and certified by experts.

Some developers were taking out money meant to protect homebuyers, leaving them in trouble. So, after warnings to banks, the Chairman asked the ministry for help.

Misusing the money stops genuine projects from happening. A spokesperson said banks must check withdrawals to stop this. H-RERA’s order says banks will be in trouble if developers take out money illegally from RERA accounts. The order from February 10 says banks must make sure developers show certificates from experts before taking money out. These certificates prove the money is being used properly.

According to the guidelines, developers must have three bank accounts for each project. One gets money from buyers, one is for construction costs, and one is for the developer to use freely.

A letter to the main bank in Gurugram said developers and banks weren’t following rules about taking out money from RERA accounts. They need to fix this so people can trust them again.

In short, the Union Finance Ministry and H-RERA are working to protect homebuyers. By making sure developers follow rules and banks check how money is used, they want to build trust in real estate dealings and keep homeowners’ dreams safe.

Ensure complete compliance with RERA requirements with the help of RECOS.

Further Reading:

Gurugram: Finance Ministry orders banks to check RERA funds’ misuse : The Tribune India

Banks liable if funds diverted from Rera accounts: H-Rera – Hindustan Times

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