Haryana RERA warns banks of illegal withdrawals from escrow accounts

February 16, 2024: The Haryana Real Estate Regulatory Authority (H-RERA) has issued a letter to banks on February 12, warning them of legal action if they permit developers to withdraw funds from the regulator’s accounts, mention a ToI report. 

Banks are asked to stringently monitor fund withdrawals to avoid any legal action by the regulator. Also, if any developer is found guilty, the developer will have to pay a penalty of over 5% of the cost of the project, under section 4 of the Real Estate (Regulation and Development) Act (RERA), 2016. 

Note that under the RERA Act, 70% the money collected from home buyers for constructing the project has to be deposited in a separate bank account known as the RERA Escrow account. This money can be only used for construction of the project for which it was collected and cannot be diverted towards other projects even if they belong to the same developer.