Maintaining Escrow account will be must for builders
The draft Real Estate (development and regulatory) Bill has suggested that every builder must maintain escrow account for customer advances and all third-party liabilities so that proper monitoring and use of proceeds is ensured in real estate projects.
Last year, the Reserve Bank of India, too, asked banks to put in place an escrow mechanism that can fence their loans to real estate firms and keep a closer tab on the end use of funds.
At present, there is no such regulatory stipulation. Banks are trying to negotiate the opening of escrow account in cases where they apprehend that sale proceeds can be taken out of the project, though it is not mandatory.
According to the proposed regulatory bill, the escrow account will ensure the timely implementation of the projects in India as well as it will also ensure transparency in fund utilization.
Most of the time, the projects in India are delayed due to fund crunch. If the developers have an escrow account dedicated to the project, the problem could be contained.
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Government finally thinking of Real estate Regulatory Bill
Source: Live Mint
delay of real estate projects, escrow account, projects in India, Real estate projects, Real Estate regulatory bill, Reserve Bank of India
