What is RERA? Understanding Current Accounts and Their Role in RERA Compliance

Posted on Monday, December 16th, 2024 | By IndusInd Bank

The Indian real estate sector has seen a transformative shift since RERA’s implementation. But, what is RERA?

The Real Estate (Regulation and Development) Act, 2016 is commonly referred to as RERA. This significant legislation was introduced to inject transparency, accountability, and efficiency into the real estate market. It is crucial for developers, buyers, and investors to understand RERA and adhere to its compliance requirements is crucial. A central part of this compliance involves managing finances through RERA current accounts. In this article, we explore what RERA entails, the importance of compliance, and the critical role current accounts play.

Why Was RERA Introduced?

The Indian government introduced RERA to safeguard homebuyers’ interests and promote fair practices in real estate transactions. Prior to RERA, delays, lack of transparency, and poor financial management plagued the real estate market. RERA addresses these issues by mandating the registration of real estate projects and agents. Developers must submit detailed project information and regular updates to a state-level RERA authority. This ensures that buyers have access to accurate and reliable information.

One of RERA’s key provisions is the stipulation that developers must comply with strict norms, such as maintaining a separate bank account for each project. This measure prevents the diversion of funds, ensuring that money collected from homebuyers is used for the respective project only. This requirement is crucial for safeguarding buyers’ investments and enhancing their trust in the market.

The Importance of RERA Compliance

Compliance with RERA is not just a legal obligation, but a strategic necessity for developers. It helps them maintain credibility and avoid potential legal complications. Non-compliance can lead to severe penalties, project delays, and loss of reputation. Therefore, understanding and adhering to RERA guidelines is essential for long-term success.

A fundamental requirement under RERA is the management of project finances through a designated current account, commonly referred to as the RERA current account. This account is for depositing 70% of the funds collected from buyers. These funds should be used solely for land and construction costs. This financial discipline ensures the timely completion of projects, avoiding delays and fostering trust among buyers.

Benefits of RERA Current Accounts

Opening a current account specifically for RERA compliance offers several advantages for developers:

1. Enhanced Transparency: A dedicated current account ensures that all transactions related to a project are documented and traceable. This fosters transparency in financial dealings, allowing developers and buyers to have a clear understanding of how funds are being utilised.
   
2. Effective Fund Management: By maintaining a RERA current account, developers can efficiently manage project funds, ensuring that they are utilised appropriately and in compliance with RERA guidelines. This financial discipline helps avoid unnecessary expenses and ensures optimal resource allocation.
   
3. Building Trust: Adhering to RERA regulations through a well-managed current account enhances trust among buyers. When buyers are assured that their investments are being used as promised, it builds confidence and encourages more people to invest in real estate.
   
4. Simplified Auditing: Having a separate account for each project simplifies the auditing process. Regulatory authorities can easily verify compliance, reducing the risk of discrepancies and ensuring that developers are adhering to all legal requirements.

IndusInd Bank’s Current Accounts for RERA Compliance

IndusInd Bank offers a range of current account solutions tailored to meet the specific needs of real estate developers, ensuring seamless RERA compliance. With its robust banking infrastructure and customer-centric approach, IndusInd Bank is well-equipped to support developers in managing their project funds efficiently.

Features of IndusInd Bank’s Current Accounts:

1.      Simple Account Opening Experience:

IndusInd Bank offers a seamless account setup process, allowing you to select a memorable account number. The bank’s fully digital approach simplifies the opening of new accounts, including those for current account documentation.

2.      Adaptable Cash Deposit Limits:

Enjoy flexible cash deposit limits with IndusInd Bank’s Current Accounts. For example, the Indus Inspire Current Account permits up to ₹3 lakhs in free cash deposits each month.

3.      Diverse Account Choices:

Choose from a range of accounts like the Indus One Business Account, Indus Max Account, or Indus Tarakki Account, each tailored to meet distinct business needs.

Also Read: Check Out the Benefits of Current Accounts

Conclusion

RERA has significantly reshaped the landscape of the real estate sector in India, introducing essential transparency and accountability. For developers, understanding and adhering to RERA compliance is not just a regulatory requirement, but a strategic advantage. Managing project funds via a RERA current account is a critical component of this compliance, ensuring financial discipline and trust-building.

IndusInd Bank, with its specialised current account solutions, is an ideal partner for developers seeking to navigate the complexities of RERA compliance. As the real estate sector continues to evolve, aligning with trusted banking partners like IndusInd Bank can help developers build trust with their buyers and achieve long-term success in the market.

Open a current account with IndusInd Bank today!

Disclaimer:
The information provided in this article is generic and for informational purposes only. It is not a substitute for specific advice in your circumstances. Hence, you are advised to consult your financial advisor before making any financial decision. IndusInd Bank Limited (IBL) does not influence the views of the author in any way. IBL and the author shall not be responsible for any direct/indirect loss or liability incurred by the reader for making any financial decisions based on the contents and information.