The Cabinet nod for the proposed Real Estate Regulation and Development Bill, which has been pending since 2007, is a welcome move.
CII has always favoured setting of an institutional mechanism to improve the image of this crucial Sector for Indian economy and setting up of a Regulator is a step in the right direction. Though we must also keep in mind that multiple Acts and Rules exist for protection of consumer interests for any deficient services in any sector and hence it needs to be ensured that the proposed Real Estate Regulatory Authority (RERA) does not end up merely replicating various functional roles.
While it is also laudatory that the proposed Bill calls for launching of projects only after getting all statutory clearances, it should equally be the responsibility of the proposed Regulator to ensure that the competent authorities make available their approvals within specified time limits.
Another provision in the proposed Bill makes it mandatory for a developer to maintain a separate bank account for every project to ensure that the money raised for one project is not diverted. Retaining amounts realized from allottees and placing in Banks would affect the financial cash flows for projects and even more so for metropolitan cities where land cost component is significant and already paid by promoter. If at all such an account is to be maintained, the limit should be on a lower side and include payment of interest and EMI pertaining to loans availed for construction of the said project.
It is also heartening to note that all the Real Estate Agents are required to be registered with the proposed Authority, as it will help detect money trail and curb money laundering.
At the same time, provision in the Bill pertaining to return of money to customer with interest in case of delay is well meant, it should also be borne in mind that any regulatory frame work should cover all stake holders- promoter, customer [allottee] and competent Authority and all obligations should be evenly distributed.
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