Tamil Nadu RERA Mandates Three Bank Accounts Per Real Estate Project To Track Homebuyer Funds
Pranav B Prem
In a move aimed at preventing diversion of homebuyer funds across real estate projects, the Tamil Nadu Real Estate Regulatory Authority (TN RERA) has directed promoters and builders to operate three separate and designated bank accounts for every registered real estate project. The direction has been issued through an order dated December 12, 2025, and will apply to all project registration and resubmission applications received from January 1, 2026 onwards.
The Authority stated that the new framework is intended to bring the entire flow of funds collected from allottees under regulatory oversight, starting from the point of collection itself. TN RERA noted that although the Real Estate (Regulation and Development) Act, 2016 mandates promoters to deposit seventy percent of the amounts realised from allottees towards land and construction costs in a separate account, the initial collection of money often happens in ordinary bank accounts, which remain outside the Authority’s monitoring mechanism.
TN RERA observed that in practice, promoters sometimes maintain a single collection account for multiple projects or transfer funds from collection accounts to designated accounts at a later stage. This, according to the Authority, creates room for diversion of funds and defeats the purpose of the statutory safeguards. The Authority noted that “there is no mechanism to monitor the collection account” and that inconsistent practices were being followed by promoters.
To address this issue, the Authority has mandated that every real estate project must have three designated bank accounts, all opened in the same scheduled bank and branch. These include a collection account, a separate RERA account, and a transaction account.
Under the new system, all payments received from homebuyers must first be credited to the collection account. No withdrawals will be permitted from this account in any form. The funds can move out of the collection account only through an automatic sweep mechanism.
Seventy percent of the amount collected must be transferred on the same day to a separate RERA account. Withdrawals from this account will be permitted only after submission of certificates from the architect, engineer and chartered accountant, as required under the Act. The Authority clarified that funds from this account can be used only for land costs, construction or development work, and refund of principal amounts to allottees, with refunds capped at seventy percent of the amount payable.
The remaining thirty percent of the collections will be transferred to a transaction account. This account may also receive promoter contributions and project loans. The transaction account can be used for project-related expenditures such as marketing expenses, administrative costs, loan repayments, interest payments, compensation, penalties imposed by the Authority, and refunds up to thirty percent.
For projects developed under joint development agreements, TN RERA has issued additional directions. The Authority has mandated that two complete sets of these three accounts must be opened—one for the landowner and one for the promoter—irrespective of the number of landowners or promoters involved in the project.
The order also tightens disclosure requirements relating to project loans. Promoters will now be required to furnish full details of all project loans, whether secured or unsecured. This includes particulars of the lender, the amount sanctioned and disbursed, outstanding dues, mortgage details, and certification from a chartered accountant confirming that the loan has been utilised exclusively for the project. Any loan availed after project registration must be disclosed immediately, and all repayments must be routed only through the designated transaction account.
The Authority has further directed that promoters must obtain prior written approval from TN RERA for any change in the designated bank accounts of a project. After completion of the project, promoters will be permitted to withdraw the remaining balances from all three accounts only after the Authority issues a completion report and communicates the same to the concerned bank.
TN RERA has also permitted promoters to place funds from the seventy percent separate account in fixed deposits, subject to strict safeguards. Such deposits must be no-lien in nature, cannot be used to raise loans or create charges, and the maturity proceeds must be credited back only to the same separate account. With these directions, TN RERA has put in place a comprehensive banking framework to ensure transparency, accountability, and strict tracking of homebuyer funds, significantly tightening financial discipline in real estate project execution across the State.
