The 3-Bank Account Rule under RERA: What Developers Need to Know.
Author: Editorial Desk
Introduction:
The Tamil Nadu Real Estate Regulatory Authority (TNRERA) has introduced a significant change to the way project funds must be managed under RERA. Effective from 1 January 2026, every new RERA registration application in Tamil Nadu must comply with a structured 3- Bank Account framework designed to enhance fund traceability, project-level financial discipline, and regulatory oversight.
While the requirement stems from the existing rule for separate bank account principles embedded in RERA, the new framework goes much further by monitoring, regulating the complete flow of customer collections from receipt to utilization of funds.
For developers or promoters, this is not merely a banking compliance requirement; It has direct implications on operations, project cash flow management, internal controls, and RERA regulatory reporting.
TNRERA and the 3- Bank Account Rule
RERA already requires 70% of customer collections in a real estate project to be deposited into a separate account and used only for land and construction costs.
However, regulators have observed challenges in monitoring the movement of funds before they reach the designated RERA Bank account. In many cases, customer collections first enter operational accounts, creating potential risks relating to fund diversion, delayed transfers, and lack of visibility into project-level cash flows.
The new framework seeks to address these concerns by ensuring that every rupee collected from allottees is tracked from the point of receipt.
The objective is straightforward:
- Strengthen project-level financial governance
- Prevent diversion of customer funds
- Improve transparency for regulators and lenders
- Ensure timely project completion
- In total to achieve the objectives of the RERA Act
What Is the 3- Bank Account Rule?
Under the TNRERA framework, developers, promoters must open three designated Bank accounts for every registered project in the same scheduled bank and branch.
The 3-Bank Accounts are classified as:
- 1. RERA Designated Collection Account
- 2. RERA Designated Separate Account
- 3. RERA Designated Transaction Account
Continue reading to know what each of these bank account types are:
1. RERA Designated Collection Bank Account
This is the single source to collect all customer amounts received through sales directly.
The account is designed as a collection-only account. With this account, builders are strictly not permitted to do any transaction of withdrawing funds through cheques, net banking, debit cards or any other payment methods.
Instead, banks must automatically transfer:
- 70% of collections to the Separate Account
- 30% of collections to the Transaction Account
The transfer must happen through an auto-sweep mechanism on the same day.
2. RERA Designated Separate Bank Account
This account receives 70% of buyer collections.
Funds can only be used for:
- Land acquisition costs
- Construction and development costs
- Limited principal refunds to allottees
All withdrawals can be done only after professional certificates are submitted by:
- Architect
- Engineer
- Chartered Accountant (with a QR Code)
The threshold for withdrawal of funds will be in continuation of the existing RERA guidelines where developers can only withdraw funds in proportion to the percentage of project completion.
3. RERA Designated Transaction Bank Account
30% of the amount collected from homebuyers will be deposited into the RERA Designated Transaction Bank Account.
This account can be used for all project-related operational expenses such as:
- Sales and marketing expenditure
- Administrative costs other than for the project
- Income Taxes
- Loan servicing
- Compensation payable to customers
- Regulatory penalties
- Other expenses part of the project
Any / all contributions from Promoters and project finance borrowings will also be routed through this account.
Applicability of the Three Bank Account Rule
While RERA Act is national, individual state authorities are vested with the power to make certain changes to adapt to local guidelines and requirements without deviating from the core of the central Act.
Currently, the following states have implemented the 3-Bank Account Rule applicable for all new projects.
- Tamil Nadu – TNRERA: Applicable to all new project registrations from 1st January, 2026 onwards
- Maharashtra – MAHARERA: In force from 1st July, 2024
- Uttar Pradesh – UPRERA: Implemented in December 2023
Role of Banks under RERA directives
With this new change enforced by TNRERA, Banks are made active participants and are expected to be the regulatory gatekeepers. As part of the compliance requirement, banks are now:
- Marking Stop Payment and disabling Net Banking facility for all RERA designated accounts
- Any cheques issued from the RERA Designated Collection Account will not be processed
- Restrict withdrawals from the collection account through any form of payment instruments
- Automated Transfers: Banks will now move all collection received from homebuyers into the respective RERA Designated Separate Account and Transactions Account via Auto-sweep facility
- Freeze accounts when directed by TNRERA
Impact of the 3-Bank Account Framework for Joint Development Projects / JDAs
For Joint Development Agreements (JDAs), separate sets of accounts must be maintained for:
- The promoter
- The landowner
In summary, the 3-Bank account rule is a major shift towards financial governance, demanding enhanced transparency and better cash flow management in Tamil Nadu’s real estate sector. Proactive adoption of these guidelines will mitigate regulatory risks and foster long-term project viability.
As a follow-up to this topic, we will soon bring your more detailed insights for the below:
- What is a Scheduled Bank?
- Bank Account to be opened locally - Definitions and applicability
- Who can operate these RERA Accounts
- Do landowner(s) need to open separate bank account or can deposits made into this account only
- How to deposit loan borrowings to RERA account
- How to calculate withdrawal of funds
- Why are certificates from Engineers, Chartered Accountants and Architects a must to withdraw funds
Conclusion
In summary, the 3-Bank account rule is a major shift towards financial governance, demanding enhanced transparency and better cash flow management in Tamil Nadu’s real estate sector. Proactive adoption of these guidelines will mitigate regulatory risks and foster long-term project viability.
Disclaimer:
The information contained in this article is provided for general informational purposes and does not constitute legal advice. Readers should not act or refrain from acting on the basis of any content included herein without seeking appropriate legal or professional advice on the specific facts and circumstances at issue.
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