U.P. RERA Makes No-Lien Project Accounts Mandatory In Revised Bank Account Directions

The Uttar Pradesh Real Estate Regulatory Authority has revised its project account framework, tightening safeguards for homebuyer and project funds through stricter withdrawal controls, no-lien protections, and enhanced oversight of promoters and lenders.

Describing project bank accounts as “the most sacrosanct," the Authority said changes to them would be permitted only in exceptional circumstances.

The changes have been introduced through the “U.P. Real Estate Project (Maintenance and Operation of Project Bank Accounts) Directions, 2020 – 3rd Revision, 2026”, which took effect upon publication on the Authority's website.

The revised directions retain the existing requirement for promoters to maintain three designated project bank accounts for each registered project: a Collection Account, a Separate Account and a Transaction Account. However, the framework introduces tighter operational safeguards around how project funds are deposited, withdrawn, monitored and protected.

All amounts collected from allottees, including GST and home loan disbursements from banks and non-banking financial companies, must first be deposited in the Collection Account. Of this, 70% must automatically be transferred to the Separate Account through standing instructions, while not more than 30% can move to the Transaction Account.

U.P. RERA said the protected funds in this account can be used only towards land and construction-related expenditure for that specific project, subject to certifications by an architect, engineer and chartered accountant, and in proportion to the percentage of project completion.

The directions prohibit use of these protected funds for penalties, compensation, assured returns, rebates or liabilities relating to other projects. They also require 100% of secured project finance to be deposited directly into the Separate Account, while capping payable interest on unsecured loans and borrowings from non-banking financial companies at prevailing SBI-MCLR rates.

The revised framework also requires both the Collection Account and Separate Account to function as no-lien accounts, shielding project funds from third-party attachments, encumbrances and unrelated liabilities. Banks have also been barred from issuing cheque books, debit cards, ATM access, internet banking, overdraft or sweep facilities for the Collection Account and Separate Account.

Promoters seeking withdrawals from the Separate Account must present original U.P. RERA-generated certificates before banks process the transaction. The Authority warned that architects, engineers and chartered accountants issuing false or incorrect certifications could face penal action as well as disciplinary proceedings before their professional regulatory bodies.

The directions also place direct compliance obligations on banks and non-banking financial companies, including verifying project registration details, ensuring compliance with the automatic transfer mechanism, verifying withdrawal certificates and freezing project accounts upon expiry of registration.

U.P. RERA has also empowered itself to freeze project accounts, call for information, conduct audits and investigations, and issue directions regarding account operations.

The Authority said promoters seeking to change project bank accounts would be required to obtain prior approvals and complete a prescribed compliance process, while closure of project accounts would require completion-related certifications, declarations and proof of discharge of liabilities.