Ghaziabad: In order to boost the housing for economically weaker section (EWS), the Ghaziabad Development Authority (GDA) is going hard on the developers. The authority has issued two directives for the developers. From now, the developers will have to maintain an escrow account to construct flats for the EWS category.
As per the latest directive by the GDA, the developers will have to submit the construction capital in the escrow account that will be utilised exclusively to fund construction activities in EWS category. The authority will also carry out the timely audit of the account. “If the capital is found to be utilised in activities other than the construction, action will be taken against the builder,” told vice chairperson of GDA, Kanchan Verma.
Verma told that as per the rules, builders are bound to dedicate 10 per cent of the total housing space in integrated and high-tech township for the EWS category.
However, since this rule is not being followed, the authority has come up with a solution of forcing the developers to keep the capital for EWS construction in a separate escrow account.
Verma also said that a target to construct over 10,000 housing units was set for the EWS category. However, the speed and ratio in which this has progressed is worrisome.
Besides, the authority has another directive to force the builders to complete the construction for EWS category. Verma told that the completion certificate to housing projects will be issued only if they fulfill the target of EWS construction of their area.
What is an escrow account?
An escrow account is one where funds are deposited or accumulated for a specific purpose. Withdrawals from such account are restricted, so that funds can be withdrawn only to achieve that specific purpose.
The real estate developers are often accused of diverting funds they receive from the homebuyers for a particular project. The scams in Jaypee and Amrapali are the live examples. To restrict this practice, a provision of maintaining escrow account was inducted in the Real Estate (development and regulation) Act, 2016. As per this provision, developers are required to open an 'escrow account' for each project they undertake to develop.
The Act stipulates that, “70 per cent of the amount realised for the real estate project from the allottees, from time to time, shall be deposited in a separate account and will be maintained in a scheduled bank to cover the cost of construction and the land cost and shall be used only for that purpose.”