 "Finance Minister Nirmala Sitharaman")
The Department of Financial Services (DFS) under the Ministry of Finance has written to all public sector banks, including the State Bank of India (SBI), to ensure compliance with the norms of the Real Estate (Regulation and Development) Act (RERA Act), 2016, while withdrawing funds from the escrow accounts.
Under Section 4 (2) (1) (d) of the RERA Act, developers are required to deposit 70 per cent of the sale proceeds from each project into an escrow account. This fund can be used only for covering construction expenses and land acquisition. Withdrawal from these accounts is permissible for the promoters upon certification by a practising architect, engineer and chartered accountant.
The certificate from the architect specifies the percentage of completion of construction work of each of the tasks/activities of the building wing of the project. The certificate from the engineer mentions the actual cost incurred on the construction of each of the buildings/wings of the project. The certificate from the CA specifies the cost incurred and paid for land as well as construction.
Also, the withdrawal can only be in proportion to the completion percentage of the project.
In the letter on Friday, the DFS said that the chairman of Haryana RERA’s Gurugram bench, Arun Kumar, had written to the Ministry of Housing and Urban Affairs earlier this month stating that some promoters were not complying with the norms of withdrawal.
“In the above background, Chairman H-RERA has requested MoHUA to take up this matter with DFS for issuing instructions to all banks dealing with RERA accounts to comply with the provisions of the RERA Act, 2016,” the letter reads. “In view of the above, all banks are requested to ensure compliance with the provisions of the RERA Act in regard to withdrawal from RERA A/Cs.”
In February, H-RERA started a survey of stuck residential projects in Gurugram. These included five projects of Mahira Homes, three OSB projects and one each by Raheja Developers and Orris Infrastructure.
Last year, H-RERA ordered a forensic audit into all five stalled projects of Mahira Homes. The authority had also earlier banned the sale and purchase of any unit of Raheja’s Raheja Revanta in Sector 78. Orris Greenpolis in Sector 89 has been stuck midway after the co-developer Three C Shelters abandoned the project.
Kumar told Business Standard on Friday that the authority has done its due compliance. In many accounts “we found no certificates,” he said.
Anuj Puri, chairman of Anarock Group, however, believes that most large and listed developers are consciously following all the norms and regulations underlined by RERA. “Rather than thinking short-term, these players have a long-term vision to establish a strong base not just locally but also in newer geographies. Even as these developers expand to new geographies, they stay highly focused on the existing protocols,” he said.
“Are smaller developers still flouting the rules, requiring the Ministry of Finance to step in? It seems so. Which is why consolidation under corporate developer banners is such an important and desirable phenomenon,” said Puri.
