What is the RERA 70% rule?

Under Section 4(2)(l)(D) of the RERA Act, 2016, 70% of amounts realised from allottees must be deposited in a separate account at a scheduled bank and used only for that project's land and construction costs.

Who certifies withdrawals from the RERA account?

An engineer, an architect and a chartered accountant in practice must certify that the withdrawal is in proportion to the percentage of completion. Some states require these professionals to be empanelled with the authority.

Can the 30% balance be used freely?

It sits outside the separate account, but state rules and lender escrow agreements often restrict its use. In Maharashtra, for projects registered from July 1, 2024, it moves to a designated transaction account for permitted project expenses.

Can construction finance be repaid from the RERA account?

It depends on the loan structure, the agreements and state rules. Lenders usually combine certified withdrawals and balance collections in an escrow waterfall. Confirm the structure with your lender and legal advisor.

Does the rule apply to ongoing projects?

For ongoing projects registered under RERA, the separate account requirement applies to amounts to be realised from allottees, subject to the state's rules. Check your state authority's rules for transitional provisions.

RERA 70% Escrow Rule: How It Affects Construction Finance and Repayments

MoneyKarma Editorial Team, Business finance guides Last updated 9 October 2026

Section 4(2)(l)(D) of the RERA Act, 2016 requires promoters to deposit 70% of amounts realised from allottees in a separate scheduled bank account, usable only for that project's land and construction costs. Withdrawals must be proportionate to completion and certified by an engineer, an architect and a practising chartered accountant.

What exactly does the RERA 70% rule say?

The rule sits in the declaration every promoter files when registering a project. Section 4(2)(l)(D) of the RERA Act, 2016 says that seventy per cent of the amounts realised for the project from allottees, from time to time, shall be deposited in a separate account maintained in a scheduled bank, to cover the cost of construction and the land cost, and shall be used only for that purpose.

Three provisos follow:

Withdrawals from the separate account must be in proportion to the percentage of completion of the project.
Withdrawals can be made only after an engineer, an architect and a chartered accountant in practice certify that the withdrawal is in proportion to completion.
The promoter must have the accounts audited within six months after the end of every financial year by a practising chartered accountant. The audit verifies that amounts collected for the project were used for it and that withdrawals followed the completion proportion.

A "scheduled bank" means a bank included in the Second Schedule to the RBI Act, 1934.

What does "in proportion to completion" mean in practice?

State rules set out the mechanics. Under the Maharashtra rules, for example, the promoter submits three certificates to the bank operating the separate account:

From the project architect, certifying the percentage of completion of each building or wing.
From the engineer, certifying the actual cost incurred on construction.
From a practising chartered accountant, certifying the cost incurred on construction and land, and the proportion of that cost to the total estimated project cost.

The total estimated cost multiplied by that proportion sets the maximum amount that can be withdrawn. Haryana's Gurugram authority uses a similar three-certificate process and requires the professionals to be empanelled with the authority.

Worked example: how much can you withdraw?

Illustrative numbers, using the method described in state RERA procedures.

Item	Amount
Total estimated project cost (land plus construction)	₹300 crore
Land cost incurred	₹100 crore
Construction cost incurred so far	₹20 crore
Total cost incurred	₹120 crore
Proportion of cost incurred	120 / 300 = 40%

The promoter can withdraw up to 40% of the total estimated cost, capped at costs actually incurred, from the separate account, after the three certificates are submitted. If the account holds ₹90 crore of collections, only the amount justified by certified costs can come out. The rest stays until construction progresses.

Does every state run the account the same way?

The 70% requirement comes from the central Act, but states add their own procedures. Maharashtra is the clearest example. Under MahaRERA Order No. 56/2024, effective July 1, 2024, projects registered from that date must open three accounts in the same scheduled bank:

Collection account: all allottee payments land here.
Separate account: 70% of collections is moved here, for land and construction costs only.
Transaction account: the balance, up to 30%, moves here for other permitted project expenses.

Other states may differ on empanelment of professionals, formats and reporting. Always check the current rules of the state authority where the project is registered.

How does the 70% account interact with construction finance?

Lenders treat the RERA account as protection for the construction budget, and they layer their own escrow on top. A typical structure:

Buyer payments come into the collection account.
70% goes to the RERA separate account. Withdrawals against certified costs are used for construction and land, and may also be used to service project debt where that debt has funded construction, depending on the agreements and state rules.
The balance flows to an escrow account controlled under the loan agreement.
From escrow, the lender sweeps a fixed percentage of collections, or a release price per unit sold, towards interest and principal.
Any surplus goes to the promoter.

The exact waterfall is negotiated with the lender and must stay consistent with RERA and state rules. Get it in writing in the sanction terms.

What does the rule mean for a developer's cash planning?

Collections are not free cash. Only the portion outside the separate account, and only after the lender's sweep, is available for overheads or new projects.
Construction pace drives liquidity. You cannot withdraw ahead of certified progress, so a slow site traps cash in the account.
Land payments count only once incurred. Deferred land payments to landowners need careful planning.
Certification takes time. Build the certification cycle into your monthly cash plan.
Company overheads need a separate source. Many developers use a company-level working capital line for costs that cannot be paid from project accounts.

Common mistakes with the RERA account

Using collections from one project to fund another project's land.
Withdrawing before certificates are issued.
Not reconciling bank account balances with the CA's cost certificates.
Missing the annual audit within six months of year end.
Agreeing a lender escrow waterfall that conflicts with the state's account rules.

Each of these can trigger regulatory action and lender covenant breaches at the same time.

What should be in your monthly RERA account routine?

Reconcile collections. Every allottee receipt should land in the collection account and the right share should move to the separate account, in states that use the three-account system.
Track the cost-incurred ratio. Update cost incurred against total estimated cost every month, so withdrawal requests are ready when certificates are signed.
Book certificates early. Engineer, architect and CA certificates take time. Schedule them ahead of payment cycles.
Prepare for the annual audit. Keep the trail of withdrawals and certificates tidy so the CA's annual audit runs smoothly.

How MoneyKarma helps

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