Gujarat RERA Introduces New Banking Rules for Developers.

AHMEDABAD: The Gujarat Real Estate Regulatory Authority (GujRERA) has unveiled a set of new banking regulations, which will take effect starting January 1, 2025.

These updated rules mandate that developers maintain three distinct bank accounts for each project, a move aimed at enhancing transparency in financial transactions within the real estate sector.

Under the revised framework, all ongoing projects will be required to transition to this three-tiered account system. Additionally, banks have been directed to withhold issuing checkbooks and debit cards for the RERA collection bank account, which will exclusively receive payments from buyers. This measure is intended to prevent the misuse of funds and ensure stricter oversight.

According to GujRERA officials, the decision stems from observations that numerous banks in various districts permitted developers to withdraw project funds without proper verification of progress certificates issued by professionals. To address this lapse and fortify the system, the new regulations have been introduced.

The new framework, titled Gujarat RERA Bank Account Directions – 2025, requires developers to establish three types of bank accounts for a project: the RERA collection bank account, the RERA retention bank account, and the RERA transaction bank account.

The RERA collection bank account will exclusively receive funds from allottees as per the agreement for sale. The collections will include payments for amenities and other charges but will exclude pass-through charges and indirect taxes.

Developers must deposit 70% of the total amount received in the RERA collection bank account into the RERA retention bank account. The funds in this account are strictly reserved for construction costs and land expenses, as outlined in Rule 5 of the Gujarat Real Estate (Regulation and Development) General Rules, 2017.

Up to 30% of the total collections from the RERA collection bank account can be transferred to the RERA transaction bank account. The funds in the transaction account are meant for expenses not related to construction and land, such as administrative costs or other operational expenditures.

Withdrawals from the RERA retention bank account will necessitate the submission and verification of specific certifications. These include Form 1 (Architect Certificate), Form 2 (Engineer Certificate), and Form 3 (Chartered Accountant Certificate).

These certificates must be uploaded to the GujRERA portal to ensure compliance with the rules. Additionally, promoters who have RERA accounts in branches outside Gujarat are required to transfer these accounts to branches operating within the state.

To further streamline the process, GujRERA has mandated that banks implement auto-sweep transfers, adhering to the 70:30 ratio, from the RERA collection bank account to the other two designated accounts.

Moreover, the authority has explicitly prohibited the issuance of checkbooks, debit cards, and online banking services for the RERA collection bank account. This restriction is designed to prevent unauthorized access and misuse of funds, ensuring greater accountability.

The rules also emphasize strict penalties for promoters who fail to comply. If a promoter provides false information, violates the Act, or disregards orders or directions from GujRERA, they may face a penalty of up to 5% of the project cost.

This comprehensive framework underscores GujRERA’s commitment to fostering transparency, accountability, and efficiency within Gujarat’s real estate sector. By implementing these stringent measures, the authority aims to safeguard the interests of homebuyers while promoting responsible practices among developers.