MahaRERA directs real estate developers to maintain three bank accounts for every project to safeguard buyers’ interests

The Maharashtra Real Estate Regulatory Authority (MahaRERA) on June 27 said that starting July 1, real estate developers will not be able to deposit the amounts received from homebuyers in different bank accounts. 

It will now be mandatory for them to maintain three different bank accounts for every project in a single bank to ensure financial discipline and timely completion of projects.

The MahaRERA said developers have been instructed to open three separate bank accounts for every project in a single bank. The first bank account will be for the amounts received from homebuyers. 

The second bank account will have to be maintained for keeping aside 70% of the funds allocated (escrow) for the project and third account for maintaining the balance 30% of the funds received, it said.

The decision will be effective from July 1 and was taken after considering the views, suggestions and objections of all the stakeholders, the MahaRERA said in a statement.

A similar decision was taken by the Uttar Pradesh RERA (UPRERA) in December 2023. The decision mandates developers to maintain three different designated bank accounts.

Also read: Can homebuyers seek refund of booking amount from a real estate developer in case of job loss?

How will the decision help homebuyers?

According to MahaRERA, the RERA designated collection account and RERA Designated Separate Account receive legal protection from attachment by government agencies.

This decision will help in enhancing the flat purchaser’s confidence and further improve the real estate sector’s credibility. This is another significant decision by MahaRERA for improved customer experience, the regulator said in a statement.

What is the current practice?

Currently, MahaRERA has mandated developers to maintain one single designated account for every project. The developers have to maintain 70% of the total project cost in this designated account (escrow account).

Also read: 5 orders passed by MahaRERA to safeguard homebuyers’ interests in Maharashtra

However, MahaRERA said several developers have been asking homebuyers to deposit money in separate bank accounts for different purposes. For example, the booking amount for an apartment is deposited in one bank account and the amount received for amenities and infrastructure such as gymnasium, swimming pool, parking is deposited in another bank amount.

"To discontinue this practice and enforce discipline, accountability and uniformity in financial operations of housing projects and for protecting home buyers' interests, the MahaRERA has mandated developers to open three bank accounts in a single bank," the regulator said in a statement.

"MahaRERA is committed to building trust among home buyers by legally empowering them to ensure their investments are secured and protected. These measures will be effective from July 1 and are aimed at having financial discipline and transparency in managing revenue as well as expenditures related to project’s development, thereby enabling precise financial oversight in the real estate sector," said Ajoy Mehta, chairman of MahaRERA.

Also read: MahaRERA update: Developers of 195 projects set up grievance redressal cells to handle homebuyers' complaints

Developers welcome MahaRERA’s decision

Real estate developers have welcomed MahaRERA’s move.

"Developers in general have welcomed MahaRERA’s decision as it seeks to safeguard the project completion process. The decision is win-win for both the homebuyers and developers as project completion is the ultimate goal of developers," said Gautam Thacker, managing committee member, NAREDCO Maharashtra.