UP RERA Enforces Stricter Banking Rules for Real Estate Projects to Protect Homebuyers
Lucknow, May 22, 2026: The Uttar Pradesh Real Estate Regulatory Authority (UP RERA) organized an awareness meeting at the Bank of Baroda Regional Office in Lucknow to sensitize nationalized banks and financial institutions on its newly revised project account directions. Chaired by UP RERA Chairman Sanjay Bhoosreddy and attended by top banking officials, the session outlined a strict compliance framework designed to curb fund diversion and enforce financial discipline. Under the updated May 11, 2026 regulations, developers must maintain a mandatory three-account system comprising Collection, Separate, and Transaction accounts, with at least 70% of homebuyer collections auto-transferred daily into the Separate Account exclusively for land and construction costs, UP RERA said in a press release.
The revised guidelines restrict project withdrawals from the Separate Account to a strict three-certification mechanism involving an architect, an engineer, and a chartered accountant. To secure public funds, banks are prohibited from issuing cheque books, debit cards, net banking, or creating liens on Collection and Separate accounts, and they cannot allow operations on new accounts based on “in-principle approval” alone without final authority clearance. Furthermore, banking operations must immediately freeze for any lapsed or revoked project registrations, while interest on project loans from NBFCs will now be capped at the SBI-MCLR rate to prevent inflated finance costs.
To heighten financial transparency, developers are now required to submit quarterly affidavits on the UP RERA portal detailing all project finance. The regulatory authority also placed strict restrictions on “Assured Return” or “Guaranteed Return” schemes, banning developers from using funds collected from allottees to pay out these buyer incentives. Additionally, a new Standard Operating Procedure dictates that a project’s Separate Account can only be closed post-completion with explicit UP RERA approval and after verified proof is submitted showing the transfer of common areas to the Resident Welfare Association (RWA).
UP RERA Chairman Sanjay Bhoosreddy emphasized that ensuring transparency, accountability and protection of homebuyers’ interests remains the top priority of UP RERA. He stated that banks have a crucial role in preventing diversion of project funds and ensuring timely completion of projects.
