Until now, the authority has been setting up escrow accounts with private developers but did not allow participation of the banks that had provided funds to the developer for the project.
Issuing an order recently, the Authority paved the way for the banks concerned to become a stakeholder in the operating and monitoring of escrow accounts. Introduced in May 2016, along with RERA, the escrow account system was touted as the remedy to prevent the diversion of funds.
The amount deposited in the escrow account has to be used for specific purposes such as the construction of apartm-ent complexes. Also, the funds deposited in the escrow account are to be used for further construction activities.
The financial institutions and banks had asked the Authority to allow their participation in the monitoring of the escrow accounts. “It is similar to having another class monitor to discipline the students. The banks, which have provided funds to the developer, will be able to see that the money taken from the buyers is used for further construction activity of the same project,” said an officer.
The authority had mooted the changed structure of the escrow account in the recently held board meeting that took place on September 25. Following that, an order was issued to this effect on October 18, said officials.
In Greater Noida, around 1 lakh units in housing projects are in various stages of construction. Officials said that the same procedure will be followed while dealing with commercial and IT/ITes projects to avoid diversion of funds and ensure timely completion.