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Builders diverting funds from escrow account, Noida buyers allege

The UP RERA authority promises to look into the matter.

Vandana Ramnani @vandanaramnani1

Homebuyers in Noida have alleged that some developers in Noida, who are struggling to finish incomplete projects, are diverting funds meant to be kept in an escrow account. The matter have been brought to the notice of Greater Noida Authority and UP RERA.

In a letter written to the two authorities, homebuyers have asked the authorities to disclose the names and the amounts deposited by the developers on the website.

Asked if the authority is taking any action with regard to the builders who have allegedly not opened an escrow account or are diverting the monies from it, UP RERA Chairman Rajive Kumar told Moneycontrol that the authority has written to banks about the matter.

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“I would like to clarify here that there is a requirement under the RERA Act that whatever monies the buyers have put in against the project, 70 percent of that in an escrow has to be utilised for purposes of completion of that project. We have also taken up this issue with the banks recently. Bankers need a certificate from the structural engineer, from a chartered accountant and an architect together to let monies be withdrawn out of this 70 percent fund,” he said.

“It’s not that we have received complaints against only the builders on this issue. It has also been brought to our notice that some banks are adjusting their own loans out of those funds. We have brought it to their notice and informed them that they should ensure strict compliance of this provision,” he said.

Also Read: Almost half of over 13,000 complaints filed with UP RERA disposed

“If there is any specific matter that comes to our notice, we shall get it looked into immediately,” he told Moneycontrol.

On Tuesday, the UP RERA chief held a meeting at the RERA office in Greater Noida to discuss approval and regulation of layout plans of the real estate projects outside the planning areas.

The authority has received about a 1,000 complaints with respect to projects and promoters from outside the planning areas, mainly from the districts of Lucknow and Barabanki. The complaints vary from non-implementation of the projects to the promoter having run away with the money of the buyers, he said.

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First Published on May 16, 2019 08:34 am
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