Gurugram: Finance Ministry orders banks to check RERA funds’ misuse
Sumedha Sharma
Gurugram, March 8
Acting on the recommendations of Gurugram RERA Chairman Arun Kumar, the Union Finance Ministry has issued orders to all public banks to take necessary steps to ensure non-misappropriation of RERA funds.
Builders leaving projects midway
The ministry has asked banks to comply with RERA provisions and not allow any withdrawal of funds by developers from the regulator’s account. The RERA Chairman had, in February, written to banks to stop any “illegal” withdrawals as builders were leaving projects midway and misusing funds
In its orders today, the ministry has asked banks to comply with RERA provisions and not allow any withdrawal of funds by developers from the regulator’s account.
“As informed by the H-RERA chairman, it has come to the notice of the authority that some promoters are not complying with RERA provisions with regard to withdrawals. The banks are requested to comply with the withdrawal norms,” read the letter.
The RERA Chairman had, in February, written to banks to stop any “illegal” withdrawals as builders were leaving projects midway and misusing funds. According to the Act, 70% of the amount collected for any real estate project from homebuyers has to be deposited in a separate bank account to cover the cost of land and construction and is to be used only for that purpose.
The developer can, however, withdraw the amount from the account to cover the cost of the project in proportion to the percentage of completion of the project after certification from the engineer, architect and chartered accountant concerned.
It was brought to the Chairman’s notice that developers were withdrawing the money, which acted as security amount, and leaving homebuyers in the lurch. After issuing a warning to the banks, the Chairman moved the ministry.
“There are many instances where promoters have withdrawn money from RERA accounts in order to use it for purpose other than construction of the project. This syphoning of money is stalling many genuine projects. The banks need to check such withdrawals,” said RERA spokesperson.
