TN RERA Tightens Banking Framework to Safeguard Homebuyer Funds Across Tamil Nadu

Tamil Nadu’s real estate regulatory authority has rolled out a comprehensive set of banking and fund management guidelines, marking a significant shift towards stronger financial discipline in property development. The new directions issued by TN RERA are aimed at ensuring that funds collected from homebuyers are used strictly for the registered project and are tracked with greater transparency at every stage.

Under the revised framework, promoters must ensure that project funds are utilised exclusively for the specific development for which they are collected. Any loan availed after a project’s registration must be disclosed immediately to the Authority, and all repayments related to such borrowings must be routed only through the designated transaction account. This move is expected to prevent fund diversion and strengthen oversight on project-level cash flows.

The regulator has also made it mandatory for promoters to obtain prior written approval before making any changes to the designated bank accounts linked to a project. This applies to all three prescribed accounts, including the separate seventy percent account meant for construction and land costs. After project completion, developers will be allowed to withdraw the remaining balances only after the Authority issues a formal completion report and communicates it to the concerned bank.

In another key step, TN RERA has permitted promoters to place funds from the seventy percent separate account in fixed deposits. However, this relaxation comes with strict safeguards. Such deposits must be no-lien in nature, cannot be used to raise loans or create charges, and the maturity proceeds must be credited back only to the same separate account. This ensures that even parked funds remain fully traceable and protected.

Industry observers note that these measures significantly tighten financial controls in real estate project execution across Tamil Nadu. By mandating disclosures, restricting account changes, and regulating fixed deposit usage, the Authority has created a clear audit trail for homebuyer funds.

For homebuyers, the new framework offers greater confidence that their investments are being safeguarded and deployed responsibly. For developers, it underscores the need for robust financial planning and compliance. Overall, the move is expected to improve trust, reduce project delays caused by financial mismanagement, and strengthen governance in Tamil Nadu’s real estate sector.