The three-account escrow framework under RERA is entering a stricter phase. Developers are now required to maintain a Collection Account, a Separate Account, and a Transaction Account, with 70% of homebuyer funds moved daily from the collection account into the separate, construction-only account. UP-RERA's consolidated framework, effective July 13, 2026, folds 12 earlier amendments into one rulebook, a sign that states are tightening enforcement rather than easing it.
The underlying rule isn't new. RERA has long required promoters to deposit 70% of every amount collected from allottees into a separate account, usable only for the land and construction cost of that project, with each withdrawal certified by an engineer, an architect and a chartered accountant in practice. What's changed is the automation: auto-sweep transfers, daily fund movement, and no manual withdrawal access have removed the informal flexibility developers once used to bridge timing gaps.
Across the industry, the central concern is not the availability of capital but its timing and accessibility. Construction expenses, land payments, approvals, contractor dues, statutory obligations and marketing costs can arise before corresponding customer collections or certification-linked withdrawals come through. This mismatch creates working-capital pressure, especially for mid-sized and smaller developers during capital-intensive stages.
At the same time, the framework is strengthening financial traceability and reducing the scope for project funds to be diverted or commingled. That matters for buyer confidence in a market where transparency and timely delivery remain the biggest purchase drivers. The industry view emerging below isn't opposition to the framework; it's a call for a more responsive mechanism that keeps the safeguards while accommodating real project cash-flow cycles.
Mr. Mohit Goel, Managing Director, Omaxe Ltd,
"The three-account structure itself isn't new to us. Fund discipline under RERA has shaped how developers plan project finances for close to a decade. What has changed is the enforcement, with states now moving from a simple two-account split to a fully automated three-account system, complete with auto-sweep transfers and no manual withdrawal access. That has compressed the working capital flexibility developers once relied on to bridge timing gaps between land cost, approvals and construction milestones. With 70% locked for construction and 30% available for operations, marketing and statutory costs, larger developers with diversified cash reserves can absorb the shift more easily than mid-sized and smaller ones. Where the framework could improve is in the pace of fund release against verified construction progress. Faster, technology-backed certification would help developers maintain momentum without compromising the transparency buyers rightly expect. Get that balance right, and the system protects homebuyers while still letting good developers build efficiently."
Ms. Amrita Gupta, Director, Manglam Group & CEO, Manglam Spa and Resorts,
"The three-account escrow system has brought a welcome measure of financial discipline and transparency to real estate, giving homebuyers greater assurance that their funds remain aligned with the project for which they were committed. For developers, the shift has also meant a more deliberate approach to liquidity and working-capital planning. Construction is rarely linear, and project expenditure can sometimes precede collections or arise in cycles that do not neatly correspond with the movement of funds between accounts. This can place additional pressure on execution, particularly during capital-intensive stages. The principle behind the system is sound; the opportunity now is to make its functioning more responsive to genuine project realities. Greater clarity and consistency around permissible expenses, fund transfers and approvals can help preserve buyer protection while allowing credible projects to move forward with greater efficiency."
Aakash Patel, Director, Atul Projects,
“With the real estate industry moving towards a system of increased accountability and prudent use of finance, the three-account escrow model is one such major structural change which is taking place within the industry. The three-account escrow model definitely has a positive role to play in terms of promoting financial discipline and transparency in the real estate industry. However, although the model makes for better accountability in terms of the use of funds and instills trust amongst buyers, there have been certain challenges which have been faced by developers owing to the three-account escrow model. With the funds being used following certain norms, it becomes essential for developers to have a good cash flow mechanism in place at different phases of the projects. The effectiveness of the three-account escrow model can be improved by adding clarity, consistency, and flexibility while at the same time safeguarding the interests of home buyers.”
Mr. Karteesh Reddy Madgula, CEO, GHR Infra,
“The three-account framework is a positive step towards stronger project-level financial discipline because it creates clearer visibility on how homebuyer collections are deployed. For developers, the key challenge is tighter liquidity management. Construction schedules, vendor payments, statutory outflows and debt obligations do not always move in the same cycle as customer collections or certification-linked withdrawals, which can create working-capital pressure during construction-intensive phases. There is also an operational burden when certifications, banking processes and project timelines are not fully synchronised. The framework can strengthen buyer confidence by reducing the scope for diversion of project funds and improving traceability. Greater standardisation across banks, faster digital certification and withdrawal processes, and clearer guidance around project finance and common development costs can make the system more efficient while retaining the transparency and safeguards that RERA seeks to create.”
Mr. Gaurav Mavi, Co-Founder, BOP.in,
Mr. Harsh Jagwani, Managing Director, Notandas Realty,
“Maintaining three separate bank accounts under RERA significantly strengthens homebuyer confidence by enforcing strict financial transparency and preventing the illegal diversion of funds. Before RERA, a lack of transparency and frequent delays caused a massive trust deficit, pushing buyers away. By enforcing accountability, RERA brought buyers back into the market, increasing transactions and sales velocities for compliant builders.”
“Though it restricts liquidity management, locks up working capital, and occasionally slows down project execution during critical construction phases, butit reassures homebuyers and institutional lenders, reducing the risk of project disputes, cash-flow freezes, or regulatory penalties."
Mr Abhishek Raj, Foudner & CEO Jenika Ventures,
“Three-account escrow is an important milestone towards improving financial discipline in the real estate industry. Through this framework, it becomes easier to ensure segregation of funds intended for projects as well as use of funds collected from customers exclusively for the intended project, making the process more transparent and helping to improve trust among customers. On the other hand, for a developer, this process entails increased financial planning and effective working capital management. It becomes harder to have easy access to funds due to the milestone and compliance factors involved, especially for medium-sized developers handling several projects concurrently. In the future, there needs to be an efficient process of fund release in order to facilitate transparency and ease of project implementation.”
Ashok Nehlia, Founder & CEO, Nehlia Developers,
“With the implementation of the three-account escrow structure, there is an increase in accountability in terms of real estate project financing. This model lowers the probability of fund diversion and helps build trust between the consumers and the investors. As much as this is good for the industry in terms of reputation in the long term, it creates problems for developers with regard to liquidity management and regulatory compliance. Due to increased regulation of fund use, developers have to be financially well-planned and have alternative sources of working capital to continue construction work. The three-account structure would be more efficient if the process of regulatory activities was sped up through the use of technology.”
Mr. Anuj Mehta, Director, Dhuleva Group,
“The three-account escrow framework is a revolutionary move in establishing a real estate ecosystem that is more transparent, systematic, and sustainable. The framework ensures ef ective management and use of funds. It maintains financial discipline and ensures a strong relationship among incoming funds, property development, and home delivery. For builders, it results in better accuracy of financial planning as well as cash flow management for the project.
One of the significant features of the framework is the confidence it brings to buyers. When buyers know that collections from various projects are done through a secure framework, it adds one more layer of security to their investments and gives them confidence in the builder as well as the market.
As stakeholders in the field gain familiarity with the operating model, we anticipate a move toward increasingly seamless processes. Increased digitalisation, quicker banking methods and defined uniform protocols should boost ef iciency. All in all, the three-account system of ers the potential for a better balance between financial discipline, operational ef iciency and buyer confidence, which can provide a strong basis for further growth of the real estate industry.”
Conclusion
To make the system work better for everyone, the fix isn't looser rules — it's faster ones. Quicker certification cycles, standardised bank processes, and technology-backed progress verification would let compliant developers move at pace without diluting the safeguards RERA was built to enforce.
The three-account escrow system marks a real evolution in financial governance for India's real estate sector. Its ability to improve fund traceability, curb diversion and build buyer confidence makes it a genuine safeguard under RERA. But it's also reshaping how developers plan capital, narrowing the flexibility they once relied on to manage the gap between spending and collections. The next phase of the framework's success will depend less on tightening the rules further, and more on how fast the system around them like banks, certifiers, regulators can move.
