UP Rera makes three bank accounts mandatory for real estate projects

The Uttar Pradesh Real Estate Regulatory Authority (UP Rera) has implemented robust guidelines, marking a significant step toward safeguarding consumer interests and ensuring strict adherence to the RERA Act. In a bid to fortify transparency and guarantee timely project completion, real estate projects are now required to maintain three distinct bank accounts. These include a dedicated collection account for allottee payments, which must be explicitly disclosed in all project-related communications, advertisements and agreements.

To further streamline fund management, promoters are mandated to provide standing instructions for an auto-sweep mechanism, directing at least 70% of the collected amount to a separate account and limiting the remainder to the project’s transaction account. Stringent provisions prevent promoters from creating liens on the separate account and prohibit the use of funds for interest payments, penalties or assured returns. As part of the registration process, promoters are obligated to submit detailed information about the three bank accounts: the collection account, the separate account and the transaction account.

Importantly, funds from the separate account are earmarked exclusively for land costs, construction and project development. While promoters are permitted to pay standard interest on project loans, they are expressly forbidden from using the account for penal or compound interest or providing interest and compensation to allottees.

In an effort to enhance accountability, rigorous control mechanisms have been put in place, and any violations of these guidelines will incur substantial penalties. Additionally, in cases involving project rehabilitation under Section 8 of the Rera Act, a heightened level of strictness is emphasized. Promoters undertaking such projects are mandated to deposit 100% of the funds collected from allottees and all proceeds from loans for construction and development into a separate project account. To ensure compliance, allottees must be informed about making payments exclusively into this designated account.