The Uttar Pradesh Real Estate Regulatory Authority [UPRERA] and Haryana Real Estate Regulatory Authority [HRERA] ordered that no developer can repay bank loans and money borrowed from other financial lenders by using more than half of the total amount collected by the homebuyers.
In short, no developer can initiate 70 percent of the money collected from the homebuyers to repay loans. Both the authorities said that the money deposited by the homebuyers should only be used to complete the project.
While hearing a case in Gurugram, HRERA ordered the police commissioner to file a criminal case against few finance companies as these firms used the homebuyers’ money to pay-off the loans especially when the RERA guideline clearly says that such money should only be used to complete the project construction.
KK Khandelwal, HRERA chief said that this decision is first of its kind since the formation of RERA authority as we have directed the police to take stringent actions against the financers of the project.
The authority also took serious notice against these lending firms for wrongly withdrawing 100 percent of the receivable deposited in the RERA account. This is also said to be the violation of Section 4(2)(l)(D) of Rera, 2016.
As per the provision of RERA, 70% of the amounts deposited by the homebuyers for the project at timely intervals should be kept in a separate bank account which should be maintained for the construction purpose only.
On the other hand, UP Rera sent a letter to multiple banks and said that this action is obligatory for the promoter as well as for the financial lenders to work in the set provisions of the Rera Act.