3 accounts, 3 certificates, 5 purposes: The new MahaRERA regime every promoter must set up now.

Three Accounts, One Project: MahaRERA’s New Blueprint for Your Money

When you hand over a cheque to a real estate developer, where does that money actually go? For thousands of homebuyers in Maharashtra, the answer has often been a black box. Promoters have been known to divert funds meant for your apartment into other projects, land deals, or even personal expenses. The result: stalled towers, broken promises, and years of litigation.

On March 15, 2024, the Maharashtra Real Estate Regulatory Authority (MahaRERA) fired a shot across the bow of every promoter in the state. It issued a discussion paper proposing a radical new framework for how bank accounts of registered real estate projects must be maintained and operated. The proposal is not a gentle suggestion. It is a detailed, mandatory blueprint that forces every rupee collected from a homebuyer into a specific, traceable, and restricted channel. If implemented, it could fundamentally change the cash-flow dynamics of the Indian real estate sector.

The Problem: Where Did the 70% Go?

The Real Estate (Regulation and Development) Act, 2016, under Section 4(2)(l)(D), already mandates that 70% of the amounts realized from allottees must be deposited in a separate account used only for construction and land costs. That is the law. The problem has been enforcement. Promoters have used multiple accounts, ambiguous naming conventions, and opaque withdrawal procedures to blur the lines. Homebuyers and banks have struggled to verify compliance. MahaRERA’s discussion paper is an attempt to close every loophole.

The stakes are enormous. For a typical project, that means a substantial portion must be ring-fenced. If even a fraction of that is diverted, the project’s completion timeline collapses. The homebuyer is left holding a loan and a half-built shell. The promoter faces penalties under Sections 60 and 63 of the RERA Act, which can go up to 5% of the total project cost.

The Three-Account System: A Mandatory Trio

The core of the proposal is a tripartite account structure. Every registered project must maintain three separate accounts in a single scheduled bank. No exceptions. The accounts are:

• Collection Account: This is where all payments from homebuyers land. No other money goes in. No money comes out except via an auto-sweep mechanism that immediately transfers funds to the other two accounts.
• Separate Account: This receives 70% of the collections via auto-sweep. This is the construction account. Withdrawals are severely restricted.
• Transaction Account: This receives the remaining 30% via auto-sweep. This is for promoter’s other expenses—marketing, salaries, administrative costs.

The auto-sweep mechanism is critical. It removes human discretion. The moment a buyer’s payment hits the Collection Account, the bank’s system automatically splits it. The promoter never touches the 70% portion. It is locked into the Separate Account until specific conditions are met.

The Withdrawal Fortress: Three Certificates, Five Purposes

Even the 70% in the Separate Account is not freely available. The discussion paper lays down a strict withdrawal regime. A promoter can only withdraw money for five specific purposes:

• Land cost
• Construction or development cost
• Interest on loans taken for the project
• Compensation or interest payable to allottees
• Refunds to allottees

And to withdraw even for these purposes, the promoter must submit three certificates with every withdrawal request:

• Form 1: An Architect’s Certificate certifying the stage of construction and the percentage of work completed.
• Form 2: An Engineer’s Certificate certifying the quality and quantity of work done.
• Form 3: A Chartered Accountant’s Certificate certifying that the withdrawal is for a permissible purpose and that the funds will be used only for that purpose.

This is not a one-time compliance. Every single withdrawal from the Separate Account requires these three certificates. The bank is obligated to verify them before releasing funds. If the certificates are missing or deficient, the bank must refuse the withdrawal and report the matter to MahaRERA.

What the Bank Must Do: A New Set of Obligations

The discussion paper does not stop at promoter obligations. It imposes significant duties on the scheduled bank maintaining the accounts. The bank must:

• Ensure that the Collection Account has no debit instruments—no cheques, no standing instructions, no electronic transfers. Money can only go out via auto-sweep.
• Report any suspicious transaction or attempted withdrawal to MahaRERA immediately.
• Freeze or de-freeze accounts as per orders from the Authority.
• Stop all withdrawals from the Separate Account if the project’s registration lapses or is revoked.
• Verify every parameter available on the MahaRERA website before opening or operating a project account.

This last point is significant. It effectively makes the bank a co-enforcer of RERA compliance. If a project’s registration is suspended, the bank must know. If the promoter tries to open a second Collection Account in another branch, the bank must flag it. The bank’s due diligence is no longer limited to KYC norms; it now extends to the project’s regulatory status.

The No-Lien, No-Encumbrance Rule

The Separate Account and the Collection Account must be free from all encumbrances. No lien, no loan, no third-party control. They cannot be attached by any government authority unless MahaRERA itself directs it. This is a crucial protection for homebuyers. It prevents a promoter from using the construction account as collateral for a separate loan. It also prevents tax authorities or other creditors from freezing the account for unrelated dues.

The only exception is a direction from MahaRERA itself. If the Authority orders a freeze or attachment, the bank must comply. Otherwise, the accounts are sacrosanct.

What Happens When the Project Ends?

The discussion paper also addresses the end of a project. Once the project is completed and the occupancy certificate is obtained, the promoter must close the accounts. The process involves:

• Submitting a completion certificate and a final CA certificate to the bank.
• Transferring any remaining balance in the Separate Account to the Transaction Account.
• Closing the Collection Account and the Separate Account.
• Reporting the closure to MahaRERA.

This ensures that the 70% ring-fence is maintained until the very end. No promoter can quietly drain the Separate Account after the project is handed over.

The Penalty Bite: Up to 5% of Project Cost

Non-compliance is not a slap on the wrist. The discussion paper explicitly states that any contravention of these directions will attract penalties under Sections 60 and 63 of the RERA Act. Section 60 deals with penalties for contravention of the Act’s provisions, and Section 63 is a general penalty for contravention of other provisions. The maximum penalty can go up to 5% of the project cost.

For a large project, that is a significant sum. It is designed to deter even the most brazen promoter from attempting to bypass the system.

The Practitioner Takeaway: What This Means for You

For advocates advising promoters, this discussion paper signals a seismic shift. The days of loose account management are over. Every withdrawal must be documented. Every certificate must be in order. The bank is no longer a passive custodian; it is an active watchdog.

For CFOs and founders of real estate companies, the operational impact is immediate. You will need to set up three accounts for every project. You will need to ensure that your architects, engineers, and CAs are ready to issue certificates on demand. You will need to train your finance teams to handle the auto-sweep mechanism and the reporting requirements. The cost of compliance will go up, but so will the cost of non-compliance.

For homebuyers, this is a victory. The money you pay will be traceable. The promoter cannot divert it to another project. If the project stalls, you will have a clearer path to recovery because the funds are locked in a separate account.

THE PLAY: Every promoter must immediately review their existing bank account structure for each registered project and prepare to migrate to a tripartite system with auto-sweep, or face penalties of up to 5% of project cost under Sections 60 and 63 of the RERA Act.

The Road Ahead: Stakeholder Suggestions by April 15

This is still a discussion paper. MahaRERA has invited suggestions, views, and objections from all stakeholders by April 15, 2024. Responses must be sent to finance.suggestions2024@gmail.com. The proposed directions will come into effect from a date to be announced after the consultation period.

This is the moment for the industry to engage. Banks may argue about the operational burden. Promoters may seek relaxations for small projects. Homebuyer associations may push for even stricter controls. The final shape of the directions will depend on the feedback received.

But one thing is clear: MahaRERA has drawn a line. The era of opaque project accounts is ending. The three-account system is coming. And every promoter, bank, and homebuyer must be ready.

The bottom line: If you are a promoter, start preparing your three accounts and your certificate pipeline today. If you are a homebuyer, this is the strongest protection your money has ever had.