The Tamil Nadu Real Estate Regulatory Authority (TNRERA) has issued a crucial procedural direction under Section 37 of the Real Estate (Regulation and Development) Act, 2016, tightening financial controls on real estate projects in Tamil Nadu.

Through Proc.No.TNRERA/A3/3816/2025 dated 12.12.2025, the Authority has mandated a three-bank-account system for every registered real estate project, effective 01 January 2026.

This move directly addresses fund diversion, lack of transparency in collection accounts, and misuse of buyer money.

Legal Basis of the Circular

• Issued under Section 37 of the RERA Act
• Implements Section 4(2)(l)(D), which requires promoters to safeguard buyer funds
• Applicable to all new and resubmitted project registrations from 01.01.2026

Why TNRERA Issued This Direction

Until now:

• Buyer money was received in unmonitored collection accounts
• One collection account was often used for multiple projects
• Only the 70% RERA Separate Account was partially regulated

TNRERA identified this as a systemic risk and introduced end-to-end banking control.

Mandatory Three-Account Structure (Single Bank, Single Branch)

Every real estate project must now operate three clearly defined bank accounts in the same Scheduled Bank and branch.

1. RERA Designated Collection Account (100%)

• Purpose: First point of receipt for all buyer payments
• Mandatory rule: 100% of allottee money must be deposited here first
• No withdrawals allowed — no cheque, card, UPI, or internet banking
• Auto-sweep at end of day:
  • 70% → Separate Account
  • 30% → Transaction Account

Account naming format (mandatory):
RERA Designated Collection Account (100%) – Project Name – Promoter Name

2. RERA Designated Separate Account (70%)

• Receives 70% of buyer money automatically
• Cannot be escrowed, mortgaged, attached, or lien-marked
• Withdrawals allowed only after uploading:
  • Architect Certificate (Form 1)
  • Engineer Certificate (Form 2)
  • Chartered Accountant Certificate with QR code (Form 3)

Permitted use of funds:

• Land cost
• Construction / development cost
• Refund of principal (maximum 70%)

Account naming format:
RERA Designated Separate Account (70%) – Project Name – Promoter Name

3. RERA Designated Transaction Account (30%)

• Receives:
  • 30% of buyer money
  • Project loans
  • Promoter’s own funds
• Used for all operational expenses

Permitted expenses include:

• Refunds (up to 30%)
• Interest & compensation
• Marketing expenses
• Loan repayments
• Administrative & overhead costs
• Penalties imposed by TNRERA

Account naming format:
RERA Designated Transaction Account (30%) – Project Name – Promoter Name

Special Rule for Joint Development Agreements (JDA)

• Two full sets of the three accounts are mandatory:
  • One for the landowner
  • One for the promoter
• Applies irrespective of the number of landowners or promoters

Loan Disclosure Obligations

Promoters must disclose all project-related loans, including:

• Lender name & address
• Sanctioned, disbursed, and outstanding amounts
• Mortgage details
• CA declaration confirming loan use for the same project

Loans taken after project registration must be disclosed immediately.

Change of Bank Accounts

• Not allowed casually
• Requires:
  • Valid reason
  • Prior written approval from TNRERA
  • Affidavit + Forms RA1 to RA4

Closure of Accounts

• Allowed only after:
  • Completion application submission
  • Completion Report issued by TNRERA
• Banks can release remaining balances only after official confirmation
• Project completion is publicly notified on the TNRERA website

Obligations Placed on Banks

Banks are now legally bound to:

• Enforce auto-sweep rules
• Prevent any manual withdrawals from Collection Accounts
• Freeze accounts on project registration lapse
• Act immediately on TNRERA freeze/de-freeze orders
• Issue Form-A Bank Certificate during registration

Fixed Deposit Allowed — With Strict Conditions

Promoters may park funds from the 70% Separate Account into Fixed Deposits only if:

• FD is linked to the same account
• FD is No Lien
• No loan or charge is created
• Maturity amount returns only to the Separate Account

Effective Date

📅 Applicable from 01 January 2026
✔ Includes fresh registrations
✔ Includes resubmitted applications

Why This Matters for Buyers

• Eliminates fund diversion
• Ensures buyer money stays project-specific
• Makes refunds traceable and enforceable
• Strengthens real-time regulatory oversight

Impact on Real Estate Developers

• Cash flow flexibility is eliminated
  Buyer money cannot be mixed across projects or routed through informal collection accounts.
• Bank-level control becomes mandatory
  All three accounts must operate in the same bank with auto-sweep rules, removing manual control.
• Loan transparency is enforced
  Every project loan must be disclosed, CA-certified, and serviced only through the transaction account.
• Withdrawals become compliance-driven
  Access to 70% funds depends on timely Architect, Engineer, and CA certificates with QR codes.
• Non-compliance has immediate financial impact
  Banks can freeze project accounts on TNRERA orders or registration lapse, stalling operations instantly.

Bottom Line

This circular fundamentally changes how real estate money flows in Tamil Nadu. Promoters must now operate under continuous banking surveillance, while buyers gain unprecedented financial protection.

This is one of the most impactful financial compliance reforms under TN RERA to date.