MahaRERA probe finds 1,781 bank accounts linked to multiple projects, issues notices
Publish on : 2023-03-08 19:57:43
The Real Estate (Regulation & Development) Act, 2016, makes it mandatory to have a single bank account for the project under one registration number. This is aimed at proper completion of the registered housing projects without any diversion of funds. 1,781 projects have violated the rules by linking their bank accounts to more than one project.
An investigation undertaken by the Maharashtra Real Estate Regulatory Authority (MahaRERA) has found out that 1,781 projects have violated the rules by linking their bank accounts to more than one project.
The Real Estate (Regulation & Development) Act, 2016, makes it mandatory to have a single bank account for the project under one registration number. This is aimed at proper completion of the registered housing projects without any diversion of funds.
Taking cognizance of these irregularities, the regulator has so far issued show-cause notices to 45 such projects and is in the process of sending the notices to remaining projects.
In order to avoid occurrence of such irregularities in the future, the regulator has made changes to its systems. The updated system will block any attempt to link the designated account of one project with the bank account of another project.
Apart from this, the new system will also not allow the developer to change the mutual account. The MahaRERA has issued a new order making prior approvals for this change mandatory.
As a regulator MahaRERA, has initiated these measures to bring in financial discipline and transparency in the real estate sector to ensure homebuyers’ investment and interests are protected, and, also help improve the credibility of the sector.
As per the Real Estate Act, the developer is required to maintain only one bank account with one RERA registration number. The funds received in the respective project needs to be maintained in this account and used for the work of that project only. It is not allowed to be used for any other project or purpose as such a diversion may have an adverse effect on the project.
The developer is also required to maintain 70% of the money received from the registration of that project in this account. The developer cannot withdraw money from this account in an arbitrary manner.
While working on the project, withdrawal from this account at each stage is not allowed without certification with regards to construction update and required funds.
The regulator has highlighted this irregularity by studying the information submitted by the developers themselves to MahaRERA.
Through the show-cause notices, it has directed such developers to submit all the details of the total number of flats in each project, the bookings, funds received, withdrawals from the bank along with the evidence. The regulator will take appropriate action after examining this information.
Last week, MahaRERA red-flagged 313 projects for discrepancies in their expenditures and actual project completion status and started a more thorough inspection. The regulator has appointed a financial audit firm to scrutinise projects. It has already issued show-cause notices to all these 313 projects and they are currently under scrutiny.