To curb the evil of diversion of funds in real estate projects, the Uttar Pradesh Real Estate Regulatory Authority (UPRERA) has decided to introduce a system where banks and other financial institutions, along with the promoters, will provide the UPRERA with the bank account details of real estate projects, the Authority said.
It added that the developer will have to give "standing advice" to the banks to deduct 70 percent of the funds from the project’s collection account and transfer them to a separate account. Banks will give details of these accounts to UPRERA. The developer will have to submit a certified copy of this document to the UPRERA at the time of registration of the projects, the Authority noted.
"Projects of the real estate developers will not be registered until they provide a certified copy of the standing advice along with the registration form. We will implement this system very soon," Sanjay Bhoosreddy, the newly appointed Chairman of UPRERA, said in a press conference on September 1.
He said that it is very important that the promoter use the funds collected only for the construction and development of the project. This initiative will make the banking process related to real estate projects more stringent and transparent, he added.
Under the new guidelines, now, along with the promoters, it will also be the responsibility of the banks and financial institutions to provide UPRERA with all information about the bank accounts opened for the real estate projects. A guideline is also being prepared for this by UPRERA, and it will soon be directed to the State Level Bankers' Committee (SLBC) to ensure its implementation, the Authority said.
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Under the standard procedure of the UPRERA, the promoter has to open three bank accounts for a project: Collection Account, Separate Account (Project Account), and Expenditure Account. As per the previous arrangement, the details of all three bank accounts are to be uploaded by the promoter on the RERA portal.
But, while reviewing the details of projects, UPRERA found that many promoters have not updated the details of all three accounts on the portal, which is against the objectives of the RERA Act.
"But now UPRERA has given this responsibility to the financial institutions too, rather than solely depending on the promoters. Now promoters, along with opening bank accounts, give standing advice to banks to deduct 70 percent of the fund from the collection account and transfer it to a separate account, and the rest into the expenditure account. Further, the promoters will provide a certified copy to RERA, which it will verify from banks or financial institutions," the Authority said.
Superimposition of maps of real estate projects with revenue maps
To check the practice of illegal construction by promoters, the UPRERA will also conduct superimposition of maps. Under this initiative, the digitised map of the revenue department and the digitised master plan map of the project will be superimposed. This will reveal if extra land, other than that approved for the project, is being used by the developer for construction activities.
"Post this, the promoters will be bound to construct the project according to the records and maps that they provide to the Authority related to their project. It will be impossible for the promoter to make any changes to the original and approved map of the project, which will be easily revealed during an investigation," Bhoosreddy said.
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He said that in the first phase, this process will be implemented in 13 major cities with GIS-based master plans. Using the technique of remote sensing, the maps of the projects will be superimposed on the maps of the revenue department.
He said that the chances of a dispute between the home buyers and the promoter will also be reduced if the construction is done according to the map provided by the promoter to the Authority. This decision, in particular, will be of great importance for the Authority in the case of large projects, he said.
Special cell for QPR violations
The chairman also said that a special cell will be formed to study the Quarterly Project Report (QPR) submitted by real estate developers and take action on violations or shortcomings if found.
"We will form a special cell to develop a mechanism where each QPR will be seen in detail by the cell, and if any violation or non-compliance is found, then action will be taken against the violator," Bhoosreddy said.
Often, it is seen that the promoters take the submission of QPRs lightly and fill out the project progress details as a formality. The special cell will study these QPRs and try to analyse them through digital analytics. It will see if there is a pattern in data filling or if any norm is violated. "We will issue notices (to the builder) if any anomaly is found," he said.
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