Builders Must Deposit Mortgage Amount Into Designated Account: Karnataka RERA

Karnataka RERA has issued a notification making it mandatory for the Promoters, banks and others to deposit the entire amount borrowed for the purpose of the project into the designated account of the project and the money which is deposited shall be utilised and withdrawn by the Promoters only for the purpose of the development of the said project.

The notification also stressed the Promoter shall bifurcate and apportion the amount towards various phases and report the same during the quarterly updates along with the bank statement or Chartered Accountant’s Certificate. It further emphasised that the Chartered Accountant, based on the books of accounts maintained and while issuing the certificate shall also report whether the amount borrowed for the purpose of the project has been deposited into the designated RERA account or not.

Further, it also stated that the lenders/bankers/financial institutions shall disburse loans only to the designated RERA account of the project and that such RERA account details are published and available on the Karnataka RERA website for each registered project.

Conclusion:

In conclusion, the recent notification by Karnataka RERA marks a significant step towards ensuring transparency and accountability in real estate projects. The mandate to deposit project funds into designated accounts and strict reporting requirements, aims to protect the interests of homebuyers and promote responsible project development.