GujRERA's New Banking Rules: Enhancing Transparency in Real Estate Transactions"

GujRERA's New Banking Rules: A Game-Changer for Transparency in Real Estate

The Gujarat Real Estate Regulatory Authority (GujRERA) has announced new banking guidelines effective January 1, 2025, aimed at increasing financial transparency and accountability in real estate transactions. These rules introduce a three-tier bank account system, requiring developers to segregate funds for specific purposes. The move is expected to protect homebuyers' interests and ensure better fund management by developers.

What Are the New Banking Rules?

The new system mandates developers to maintain three distinct bank accounts for each project:

1. RERA Collection Account: All payments from buyers, including sale agreements, amenities, and charges (excluding taxes and pass-through charges), must be deposited here.
2. RERA Retention Account: Developers are required to transfer 70% of funds from the collection account to this account. The funds are designated exclusively for construction and land costs, as per Rule 5 of the Gujarat Real Estate (Regulation and Development) General Rules, 2017.
3. RERA Transaction Account: The remaining 30% of funds from the collection account can be transferred here. These funds are for expenses unrelated to construction and land.

Key Highlights of the Rules

• Limited Access: The collection account will not allow cheque books, debit cards, or online banking. This restricts misuse of funds and ensures that money flows through designated channels.
• Strict Withdrawals: Funds from the retention account can only be withdrawn upon certification by professionals (architects, engineers, and chartered accountants) through GujRERA's portal.
• Compliance Penalty: Non-compliance can result in penalties of up to 5% of the project's cost.

Impact on the Real Estate Industry

The three-tier system addresses concerns about fund mismanagement and ensures that buyers' payments are used responsibly. By tying withdrawals to verified progress reports, GujRERA is fostering accountability. This move will likely enhance trust between developers and buyers, attracting more investments to Gujarat’s real estate sector.

Are You Ready?

As these rules will apply to all ongoing and future projects, developers need to act promptly to comply. The shift to this transparent system marks a significant step towards safeguarding buyer interests and strengthening the real estate ecosystem in Gujarat.

For more insights and assistance, connect with us today!