UP-RERA Tightens Rules With New Three-Account System for Builders

P-RERA has introduced stricter banking norms requiring builders to maintain three separate project accounts. The framework aims to improve fund tracking, prevent diversion of homebuyer money and strengthen financial discipline in real estate projects.

The Uttar Pradesh Real Estate Regulatory Authority (UP-RERA) has tightened financial regulations for real estate developers by introducing a mandatory three-account system for RERA-registered projects. The revised framework is aimed at improving transparency and ensuring that funds collected from homebuyers are used for their intended purposes. 

Under the new system, every registered project is required to maintain three separate bank accounts: a collection account, a separate account and a transaction account. The structure is intended to create clearer tracking of money entering and leaving a project and strengthen financial controls for developers.

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The collection account will receive payments made by home buyers. From this account, 70% of collections will be transferred to the separate account, which is reserved for land and construction-related expenses. The remaining funds can be used for permitted project-related purposes through the prescribed banking mechanism.

The transaction account will be used for eligible project expenses, creating an additional layer of oversight over how developers access and deploy project funds. Banks and financial institutions have been asked to implement the revised operational guidelines for RERA-registered projects.

UP-RERA issued the revised project-account directions on May 11, 2026, and subsequently held an awareness meeting with nationalised and scheduled banks in Lucknow to explain the new requirements and ensure compliance.

The changes are particularly significant for homebuyers because project-level financial controls are designed to reduce the risk of fund diversion between projects. Under the RERA framework, a substantial portion of money collected from buyers is required to be used for the development of the project for which it was collected.

The revised system also seeks to improve coordination between developers, banks and the regulatory authority. Greater visibility into project accounts could help regulators monitor financial activity more effectively and identify potential irregularities.

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For developers, the new framework means greater financial discipline and documentation requirements. Builders will need to ensure that project collections, withdrawals and expenditure comply with the prescribed account structure and regulatory conditions.

The measures come as UP-RERA continues to strengthen oversight of the state's rapidly expanding real estate sector. The authority has also introduced other measures aimed at protecting homebuyers and improving project-level transparency.

Overall, the three-account framework represents a move towards greater accountability in real estate fund management, with the objective of protecting homebuyer interests while improving financial discipline across RERA-registered projects