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The Real Estate (Regulation and Development) Act, 2016 is an Act of the Parliament of India which seeks to protect home-buyers as well as help boost investments in the real estate industry. The bill was passed by the Rajya Sabha on 10th March’ 2016 and by the Lok Sabha on 15th March’ 2016. The Act was published by Ministry of Law & Justice, Govt. of India through Gazette Notification dated 26th March’ 2016.
The said Act has been got implemented from 1st May’ 2017. The Real Estate Act makes it mandatory for all commercial and residential real estate projects, where the land is over 500 square meters or eight apartments, to register with the Real Estate Regulatory Authority (RERA) for launching a project, in order to provide greater transparency in project-marketing and execution.
The said act is designed to provide uniform regulation, protect consumer interests, help speedy adjudication of disputes, improve accountability of developers and boost transparency. There are various provision in the Act and one of the provision is that, the promoter/developer has to maintain a `SEPARATE ACCOUNT` with a *Scheduled Bank for every project undertaken wherein 70 percent of the money received from the buyers shall be deposited. Such funds can only be used for the purposes of construction and land cost.
In order to facilitate opening of “SEPARATE ACCOUNT” by promoters / developers in Finacle as per provision of RERA, a separate scheme code is being customized in Finacle. In addition to normal current account, branches shall open Escrow account separately for Collection and Remittance. The prescribed charges shall be levied in Escrow collection account. A promoter/developer can open project-wise multiple accounts under this scheme using single CIF of their general Current Account. Henceforth, a new field is being customized in Finacle for capturing RERA registration number while opening account under this scheme. The account shall be opened and RERA registration number be captured in Free Text by Back Offices (COSCA).
The account opened under RERA Scheme shall have following restrictions:-
Ø No minimum balance maintenance requirement.
Ø No cheque book, ATM & IBS Facility.
As per provision of RERA Act’2016, the funds withdrawn from these SEPARATE ACCOUNT have to be utilized for the required purpose (i.e. promoter can withdraw the amounts from separate account to cover the cost of the project, in proportion to the percentage of completion of the project ). Accordingly promoters/developers have to submit a request supported with certificates from engineers, architects and chartered accountants certifying that the withdrawal are in proportion to the percentage of completion of the project, the amount shall be remitted through RTGS / NEFT only. However remittance of funds, through transfer entry be also allowed in case beneficiaries are maintaining account with our bank.
Since a Promoter/Developer may have launched multiple projects, therefore, to distinguish the accounts project-wise, the title of account shall be as under :-
Ø Collection Account- “Name of Promoter / Developer - Escrow Collection - Name of the project”.
Ø Remittance Account- “Name of Promoter/Developer- Remittance Account-Name of the project”.
For creation of CIF, branches shall obtain existing OVD documents (as defined for opening normal account as per constitution) plus certificate of registration under RERA.
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