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The Uttar Pradesh Real Estate Regulatory Authority (UP RERA) has introduced new regulations requiring promoters to maintain separate bank accounts for Interest-Free Maintenance Security (IFMS) funds collected from homebuyers. The rules also mandate that the entire maintenance corpus, including accrued interest, be transferred to the Residents' Welfare Association (RWA) or Association of Allottees once it takes over maintenance responsibilities. The move aims to improve financial transparency, protect homebuyers' interests and ensure proper management of maintenance funds.
The Uttar Pradesh Real Estate Regulatory Authority (UP RERA) has notified a new framework governing the management of Interest-Free Maintenance Security (IFMS) funds, making it mandatory for developers to maintain a separate bank account exclusively for these deposits. The revised regulations are intended to improve transparency, safeguard homebuyers' money and ensure that maintenance funds are transferred in full to residents after project handover.
Under the new rules, promoters must deposit all IFMS collections into a dedicated bank account that is separate from other project-related accounts. The authority has also directed that these funds should be kept in fixed deposits with scheduled banks until the maintenance responsibility is formally transferred to the Residents' Welfare Association (RWA) or the Association of Allottees (AoA).
A key provision of the regulations requires developers to transfer the entire IFMS corpus, along with all accrued interest, to the RWA or AoA at the time of handing over maintenance. This is expected to eliminate disputes over incomplete transfers or the retention of maintenance funds by promoters after project completion.
UP RERA noted that the absence of a uniform mechanism for handling IFMS collections had led to complaints from homebuyers regarding the utilisation and transfer of maintenance funds. By prescribing a dedicated banking structure and fixed deposit mechanism, the regulator aims to establish greater accountability in fund management while ensuring that the money collected from residents is used solely for maintenance-related purposes.
The authority has clarified that promoters cannot divert IFMS collections for construction activities, operational expenses or any purpose unrelated to maintenance. Maintaining a separate account will also enable easier monitoring and auditing of these funds by both regulators and resident associations.
The revised framework forms part of UP RERA's ongoing efforts to strengthen regulatory oversight and enhance consumer protection in the state's real estate sector. Over the past few years, the regulator has introduced several measures to improve project compliance, expedite dispute resolution and increase transparency in developer practices.
For homebuyers, the new rules provide greater assurance that maintenance deposits will remain secure until the transition of project management. For RWAs, receiving the complete corpus together with accumulated interest will provide adequate financial resources to undertake routine maintenance, repair works and other community services immediately after assuming responsibility.
Industry observers believe the reforms will encourage better financial discipline among developers while reducing conflicts between promoters and resident associations during project handover. As residential projects across Uttar Pradesh move towards completion, the implementation of these guidelines is expected to standardise IFMS management and strengthen confidence in the state's regulatory framework.
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