Following a recommendation from the Haryana Real Estate Regulatory Authority (HARERA), the Department of Financial Services (DFS) is set to mandate banks to enforce RERA norms for withdrawals from real estate accounts. The directive aims to ensure compliance by promoters of real estate projects. HARERA's proposal prompted the DFS Secretary to instruct all banks accordingly. This move points to efforts to improve regulations within the real estate sector, aligning with the broader objectives of promoting transparency and accountability in the real estate industry.
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In a bid to improve regulations in the real estate sector, the Department of Financial Services (DFS) under the Union Finance Ministry has directed all public sector banks to ensure strict adherence to the Real Estate (Regulation and Development) Act (RERA) norms concerning the withdrawal of funds from escrow accounts designated for construction purposes.
The move follows a recommendation by the Haryana Real Estate Regulatory Authority (HARERA) to the DFS secretary to issue instructions to banks to enforce compliance with RERA norms when permitting withdrawals from such accounts by real estate project developers.
Under RERA norms, developers are mandated to deposit 70% of the funds collected from homebuyers into an escrow account solely dedicated to financing the construction of the project. Withdrawals from these accounts are permissible only upon obtaining certificates from the project's architect, engineer, and chartered accountant.
In a letter addressed to banks, the DFS highlighted concerns raised by the chairman of Haryana RERA regarding non-compliance with RERA provisions by some promoters. It noted instances where withdrawals were being facilitated without ensuring the necessary certifications, which constitutes a violation of the RERA Act.
Officials at Haryana RERA expressed dismay over numerous cases where developers had siphoned funds from RERA accounts for purposes unrelated to project construction. Such actions have resulted in unwarranted delays in genuine real estate projects due to insufficient funds, causing distress to homebuyers.
The directive from the Union Finance Ministry underscores the government's commitment to ensuring transparency and accountability in the real estate sector, aimed at protecting the interests of homebuyers and fostering the timely completion of projects.
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