Gujarat RERA Implements New Banking Rules for Developers from January 2025
Starting January 1, 2025, developers in Gujarat will be required to follow new banking regulations introduced by the Gujarat Real Estate Regulatory Authority (GujRERA). The aim of these rules is to enhance financial transparency in real estate projects, ensuring that funds are used strictly for their intended purposes. Developers will now be mandated to maintain three separate bank accounts for each project, a move that is expected to prevent misuse of funds and improve project accountability.
Under the new guidelines, all ongoing projects must migrate to a three-tier bank account system. The first account is the RERA collection bank account, where all payments made by buyers will be deposited. This account will be used exclusively for receiving payments according to the sale agreement, including charges for amenities but excluding pass-through charges and taxes. The second account, known as the RERA retention bank account, will receive 70% of the funds from the collection account. This amount will be strictly allocated for construction costs and land expenses as per the guidelines laid out in Gujarat’s Real Estate (Regulation and Development) General Rules of 2017. To withdraw funds from this account, developers must provide certificates from an architect, engineer, and chartered accountant, which must be uploaded to the GujRERA portal for verification.
The third account, the RERA transaction bank account, will be used to transfer up to 30% of the total collections from the RERA collection account. These funds can be used for project-related expenses other than land and construction costs. GujRERA sources have stated that one of the primary reasons for these changes is to ensure better oversight, as previously some banks allowed developers to withdraw funds without verifying project progress with required certificates. With the new system, banks will also be prohibited from issuing cheque books, debit cards, or online banking services for the RERA collection bank account. Additionally, an automatic 70:30 sweep transfer will be set up to allocate funds between the retention and transaction accounts. If developers fail to comply with these new regulations or provide false information, they could face penalties of up to 5% of the total project cost. By implementing these banking rules, GujRERA aims to strengthen financial transparency in the sector, ensuring that buyer funds are safeguarded and that developers adhere to proper financial practices.
