RERA Bank Account Directions, 2020- Karnataka RERA Circular No. RERA/Finance-Section/BAD/02/2020-21 dated 07.01.2020

Karnataka Real Estate Regulatory Authority (RERA)
1/4, 2nd Floor, Silver Jubilee Block, Unity Building, CSI compound,
3rd Cross, Mission Road, Bengaluru-560027

No. RERA/Finance-Section/BAD/02/2020-21

Dated: 07.01.2020

Circular

Sub: RERA Bank Account Directions, 2020.

In exercise of the powers conferred under Section 25 and 37 of the Real Estate (Regulation and Development) Act, 2016 and as the Karnataka Real Estate Regulatory Authority having considered it necessary in the interest of on-time delivery of any Plot, Apartment or Building and for the purpose of ensuring the non-diversion of project funds, it is hereby decided to issue the directions herein under specified.

THE KARNATAKA RERA BANK ACCOUNT DIRECTIONS, 2020

1. Short Title

These Directions shall be called the Karnataka RERA Bank Account Directions, 2020.

2. Definitions

(i) “Act” means the Real Estate (Regulation and Development) Act,2016.

(ii) “Authority” means Karnataka Real Estate Regulatory Authority established under sub-section (1) of section 20 of the Act.

(iii) No Lien Account means Bank Account without any third-party rights or security interests.

(iv) No Lien Fixed Deposit means Fixed Deposit without any party rights or security interests.

(v) “RERA Bank Account” means the separate bank account to be maintained by the promoter in a scheduled bank in the local branch where the project is going on, in State of Karnataka as per section 4(2)(1)(D) of the Act to cover the cost of construction and the land cost of the project.

(vi) The certificate to be issued by the Chartered Accountant in practice for withdrawal of money from the separate account maintained under section 4(2)(1)(D), Project Architect, Project Engineer, shall be in Form 4, 5 and 6 respectively.

(vii) The format for Annual Audit on statement of Accounts required to be issued by the Chartered Accountant in Form 7, as maintained under the third proviso of Section 4(2)(1)(D).

(viii) Post Registration Certificates-

(a) “Form-1” for Chartered Accountant’s Certificate.

(b) “Form-2” for Architect Certificate

(c) “Form-3” for Engineer’s Certificate

(ix) Quarterly update certificates

(a) “Form-4” for Chartered Accountant’s Certificate

(b) “Form-5” for Architect Certificate

(c) “Form-6” for Engineer’s Certificates

(d) “Form-7” for Annual Audit Report on Statement of Accounts.

(x) Bank Account Change Request-

(a) “Form-B1” for Application for change in RERA Bank Account

(b) “Form-B2” for Affidavit for Registered Project.

(c) “Form-B3” for Affidavit for Under Processing Project.

(d) “Form-4B” for Chartered Accountant’s Certificate.

(e) “Form-B5” for NOC from Existing Bank

(f) “From-B6” For Fund Transfer from Bank having Proposed Bank Account

(g) “Form-B7” For Confirmation letter of change in RERA Bank Account.

(XI) Certificates for Project Extension-

(a) “Form-Exl” Architect’s Certificate For Status of work as on date.

(b) “Form-Ex2” Architect’s Certificate For Pending work as on date.

(c) “Form-Ex3” Chartered Accountant’s Fund Utilization Certificate.

(d) “Form-Ex4” Chartered Accountant’s Certificate For Funds Required.

(e) “Form-Ex5” Engineer’s Certificate For Status of work as on date.

(f) “Form-Ex6” Engineer’s Certificate For Pending work as on date.

(g) “Form-Ex7” Affidavit.

3. General Guidelines

(i) The RERA Bank Account opened in accordance with the provisions of section 4(2)(1)(D) of the Act, shall be a `No Lien Account’ and withdrawal from such separate account shall be in accordance with the provisions of the Act, Rules and Directions issued by the Authority from time to time.

(ii) The Authority recommends that the amount withdrawn from the RERA Bank Account shall be utilized for the purpose of completion of the same Real Estate Project. However, there is no end use restriction on the amount which is withdrawn from the RERA Bank Account, in accordance with the provisions of the Act, Rules and Directions.

4. Account Opening

(i) A RERA Bank Account is to be maintained for each of the registered project of the Promoter and RERA Bank Account shall be opened in the local branch where the project is going on. Details of this project specific Bank Account are to be submitted with the project registration application. As such the promoter shall have the RERA Bank Account opened before application.

(ii) It shall be required to suffix the term “RERA Designated Account for <name of the project>Real Estate Project” with the name of the RERA Bank Account holder. For example, if the name of the promoter is M/s ABC Ltd, and the name of the project is XYZ, then the name of the account should reflect as “ABC-RERA Designated Account for XYZ”.

(iii) Every project shall have only one RERA Bank Account opened in the local branch where the project is going on. In the case of multiple promoters, necessary contractual or legal arrangement should be made by the principal promoter, who is registering the project, to ensure proper operations of RERA Bank Account.

5. Deposits in Account.

(i) The Promoter shall deposit seventy percent of the amount collected/realised from Allottees (other than Pass through charges and Indirect Taxes) in the RERA Bank Account in the local branch where project is going on. In the case of a project where is higher than estimated value of sales revenue, hundred percent of the amount collected from the Allottees (other than Pass through Charges and Indirect Taxes) shall be deposited in the RERA Bank Account.

(ii) The money lying in the RERA Bank Account can be put in fixed deposits with the bank operating the RERA Bank Account provided it is a `No Lien Fixed Deposit’ and no loan can be obtained against or on such Fixed Deposit nor any charge can be created on such Fixed Deposit.

6. Withdrawals from Account.

The Promoter shall be required to follow the following procedure for every withdrawal from the RERA Bank Account till the project is completed.

(i) As per the second proviso to section 4(2)(1)(D) of the Act which provides that the amounts from the RERA Bank Account shall be withdrawn by the promoter after it is certified by an architect, an engineer and a chartered Accountant in practice, that the withdrawal is in proportion to the percentage of completion of the project.

(ii) As per Rule 5 of the Karnataka Real Estate (Regulation and Development) Rules, 2017 which prescribes the withdrawals aspects of the amounts deposited in a RERA Bank Account under Section 4(2)(1)(D) of the Act and the said Rule requires that for the purpose of withdrawal of amounts deposited in the RERA. Bank Account in respect of Registered Project, the promoter shall have the following three certificates:

(a) Certificates from the Architect in the Template Form-5 (available in the RERA website) certifying the percentage of completion of construction work each of the tasks/activity of the building wing of the project.

(b) Certificate from the engineer in the Template Form-6, for the actual cost incurred on the construction work of each of the building /wing of the project; and

(c) Certificate from the Chartered Accountant in practice other than the statutory auditors of the Promoter in Template Form-4, for the cost incurred and paid on construction cost and the land cost. The Chartered Accountant in practice is also required to certify the proportion of the cost incurred and paid on construction and land cost to the total estimated cost of the project. The total estimated cost of the project multiplied by such proportion shall determine the maximum amount which can be withdrawn by the Promoter from the RERA Bank Account.

(iii) On completion of the project, the entire balance amount lying in the RERA Bank Account can be withdrawn by the Promoter on the basis of submission of necessary certificates and due project completion compliance s including submission of end quarter data.

7. Reporting to Authority

(i) Promoter shall submit Template Form-4, Form-5 and Form-6 to Authority for withdrawal of funds and for quarterly return filing compliance.

(ii) As per the third proviso of Section 4(2)(1)(D) of the Act the promoter is required to get his accounts audited within six months after the end of every financial year by the statutory auditors of the Promoter’s enterprise and shall produce a report on statement of accounts on project fund utilization and withdrawal by Promoter in the Template Form No-7 Such report as per in the Form prescribed by the Authority, shall be submitted for each of the Project registered by the promoter.

(iii) In case of a fixed deposit being made from the money lying in the RERA Bank Account, the chartered Accountant shall verify that there is no lien or charge on such fixed deposit. The promoter and/or chartered Accountant shall obtain the No lien/charge Certificate in respect to such fixed deposit, from the bank once every three months and submit the same as part of quarterly compliance return.

(iv) The promoter shall append RERA Bank Account pass book statement copy certified by Chartered Accountant to the Template Form-4 to upload as part of project quarterly return submission.

Note-I: if the Template Form-4 issued by the statutory auditors reveals that any certificate issued by the project architect, engineer or the chartered accountant has false or incorrect information and the amounts collected for a particular project have not been utilized for the project and the withdrawal has not been in compliance with the proportion to the percentage of completion of the project, the Authority, in addition to taking penal actions as contemplated in the Act and the Rules, may also take up the matter with the concerned regulatory body of the said professionals of the architect, engineer or chartered accountant, for necessary penal action against them, including cancellation/suspension of registration of membership for practice as such.

8. Change of RERA Bank Account

(i) The power may change the RERA Bank Account from one Bank to another Bank only with prior permission of the Authority.

(ii) For RERA Bank Account change request, Promoter has to submit through Authority’s web portal along with necessary Fees and documents in the following forms:

(a) Application for change in RERA Bank Account as per Template Form — B1

(b) Chartered Accountant Certificate as per Template Form — 4B

(c) Board Resolution Copy.

(d) Notarized Affidavit (Registered Project / Under Process Project) Template Form- B2 and Template Form- B3

(e) No Objection Certificate (NOC) from the Existing Bank Account Branch as per Template Form- B5

(f) Existing bank account statement (up to closing date)

(g) The proposed RERA Bank Account shall opened

(a) Local Bank branch (within Karnataka)

(b) Bank Account Name must be in the Name of Project Name where the Project is going on, in the state of Karnataka, For example, if the name of the promoter is M/s ABC Ltd, and the name of the project is XYZ, then the name of the account should reflect as “ABC-RERA Designated Account for XYZ”.

(h) Exiting and Proposed Bank Account Pass Book copy.

(i) Reason for Change of RERA Designated Bank Account, along with supporting document.

(j) Promoter is also required to submit fund transfer compliance letter as per Template Form-B6, along with Template Form-B7 of Confirmation letter for change in RERA Bank Account and Proof of previous RERA Bank Account closure or closure RERA Designated Bank Account.

9. Power of the Authority on RERA Bank Account

i) Upon revocation of the Registration, the Authority may direct the bank holding the RERA Bank Account to freeze or de-freeze the said account, to facilitate the remaining development works in accordance with the provisions of sections 7(4)(c) and 8 of the Act.

The Authority may in the interest of the Allottees, enquire into the payment of amounts out of RERA Bank Account.

(By the Approval of Hon’ble Chairperson)

Secretary
Karnataka Real Estate Regulatory Authority

Click here for PDF


 


Act wise amended Rules and Regulations are available here: Click here for Rules & Regulation Dashboard.
For Notifications and Circulars, click here.
For bare acts, click here.

Go to Notifications and Circulars Dashboard