Karnataka RERA Updates

This Circular is guidance to the stake holders (promoters, professionals, financial institution, Allottees etc) in relation to Designated bank account opening, operation with reference to Sec 4(2)(l)(D) of the RERA Act for a Real Estate Project.

Circular No 8 – RERA/ADM/CR-116/2019-20 issued on 07-01-2020 called RERA Bank Account Directions 2019

Important aspects of the circular is enumerated for the reader to understand and implement

Opening and Operating –

  • Every project shall have a separate bank account
  • Such account shall be opened in Scheduled Bank
  • Bank Branch (Home Branch) shall be at where the project is going on
  • Such account shall be No Lien Account
  • Such account suffix the term RERA Bank Account for (project name) with the RERA Bank Account Holder.
  • Only 1 RERA Bank Account for each project (there shall be legal arrangements amongst the promoters viz., builder, land owners etc for operating the such bank account)
  • Such RERA Bank accounts shall open and submit the details along with application for grant of registration of Project

Deposits in Account –

  • 70 % of the amount collected /realized from the Allottees shall deposit into designated RERA bank account only (other than Pass through charges and Indirect Taxes)
  • Where cost required to spend is more than sales revenue, then 100 % of such realization shall be deposited
  • Surplus amount in designated RERA bank account can be deposited in a Fixed Deposit (such FD shall be NoLien / No charge Account)

Withdrawal from Account –

  • Withdrawal from account after it is certified by Architect, Engineer and Chartered Accountant in practice.
  • Withdrawal is allowed in proportion to percentage completion of the project
  • Amount withdrawn shall be utilized for the purpose of completion of the same Real Estate Project
  • There is no End use restriction on the amount withdrawn from the RERA Bank Account.
  • Formats of certificates of Architect, Engineer Chartered Accounts are notified. New Form No’s are notified –
Form Professional Certifying
Form No 1 Architect % of Completion work of project of each wing / building
Form No 2 Engineer Actual cost incurred on the construction work  of the project of each wing / building
Form No 3 Chartered Accountant 1. Certify the Cost incurred and paid on Land and Construction

2. Certify Proportion cost incurred to the total estimated cost

3. Total Estimated Cost *Proportion cost incurred = maximum amount eligible to withdraw

4. Certify by Other than Statutory Auditor

Form No 4 Annual Audit Certificate 1. Certify by Statutory Auditor

2. Audit within 6 months from end of financial year

3. Applicable to all registered projects

No Lien Certificate for Fixed Deposits 1. CA Shall verify and that there is No Lien or No Charge on Such FD

2. No Lien certificate shall obtain from bank and submit along quarterly compliance

Note  – Form 3 and Form 4 shall be issued by different CA’s
Any wrong certificates by professionals would attracts penal provisions under the Act and authority may recommend respective Institutes to initiate penal / suspension or cancellation of membership

Completion of project Withdrawal from –

  • On Completion of the project Entire balance in designated RERA Bank Account can be withdrawn.
  • Quarterly update till end quarter
  • File the completion compliance

Reporting to Authority –

  • All Form 1 / 2 / 3 shall be furnished on every quarterly filing compliance
  • RERA Bank Statement for 3 each quarter – shall certify by CA and upload during quarterly updates
  • Change of Bank Account May change the project designated RERA Bank Account only with PRIOR permission of Authority
  • Application for change in designated RERA bank account (details to be furnished for such change)
    1. Form No 5
    2. Form No 6
    3. Form No 7
    4. Form No 8
    5. Affidavits
    6. New proposed Bank account statements / pass sheet
    7. Copy of board resolution
    8. All other conditions are applicable as per opening of account compliance
  • Format of NOC from the Banker for change of designated RERA bank account
  • Format of Confirmation letter from the banker for change of designated RERA bank account

Powers of the Authority on RERA Bank Account

  • Upon Revocation of the Registration as per, authority may direct to freeze / defreeze the said designated bank account to facilitate the completion of remaining development work as per sec 7 and Sec 8 of the Act

Author Bio

Qualification: CA in Practice
Company: Venu & Vinay
Location: Bangaloe, Karnataka, IN
Member Since: 05 Sep 2018 | Total Posts: 20
CA Vinay Thyagaraj, practicing Professional in the area of Real Estate, Direct Taxation, business structuring apart from financial consultation. Practicing since 2 decades in Bengaluru, developed team of professionals to provide holistic and 360 Degree services to the clients. Living with parents, View Full Profile

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January 2021