The RERA 70% Rule: How Your Money Is Protected in a Bengaluru Project

Ask anyone who bought into a stalled Bengaluru project before 2017 what went wrong, and you often hear the same story. Money paid for a tower in one suburb quietly funded a plot purchase in another, and when the first project ran dry, construction simply stopped. The single biggest reform aimed at that problem is a rule most buyers have never read, the requirement that seventy percent of what you pay goes into a ring fenced account that can only be spent on your project. It is not glamorous, but it is the clause that decides whether your instalments actually build your flat.

The short answer. Under Section 4(2)(l)(D) of the Real Estate Regulation and Development Act of 2016, a promoter must deposit seventy percent of the money collected from buyers of a project into a separate account in a scheduled bank, and that money can be used only for the construction and land cost of that same project. The promoter can draw from it only in proportion to how much of the project is actually built, and each withdrawal must be certified by an engineer, an architect and a chartered accountant. The trade off for you is indirect but real, the rule does not guarantee delivery, but it makes the old trick of diverting your money to another project far harder.

What does the 70 percent rule actually say?

The rule requires that seventy percent of the amounts realised from allottees for a real estate project be kept in a separate account in a scheduled bank. Those funds are earmarked for the cost of construction and the land cost of that project, and not for anything else. The remaining thirty percent is left for the promoter to use more freely, covering marketing, approvals, overheads and profit, which is why the split exists at all. The number is worth sitting with for a moment, because it means that for every ten rupees you hand over during construction, seven are legally meant to be locked to the task of building your own project rather than available for the developer to deploy wherever cash is tightest that month.

The purpose is ring fencing. Before RERA, a developer could pool money across projects and use fresh collections from one to plug gaps in another, a chain that collapsed the moment sales slowed. By tying seventy percent of each project's collections to that project's own account, the law tries to ensure the money you pay is physically available to build the home you are buying. You can read a detailed walkthrough of the provision on this explainer of the 70 percent rule.

How can the builder withdraw the money?

The promoter cannot simply draw the seventy percent at will, because withdrawals are tied to physical progress. The first condition is that a withdrawal must be in proportion to the percentage of completion of the project, so a builder who has finished thirty percent of the work cannot pull out seventy percent of the funds. The second condition is certification, because each withdrawal must be certified by an engineer, an architect and a chartered accountant in practice, each confirming that the drawdown matches the stage of construction.

This two part test, proportion plus certification, is what gives the rule teeth. It converts a vague promise to build into a mechanism where money is released only as concrete, literally, goes up, and it puts three independent professionals on record each time money leaves the account. For a buyer, it means the gap between what has been collected and what has been spent is supposed to track the gap between an empty plot and a finished tower, which is exactly the alignment that was missing in the years before the law existed.

Why does this matter to a Bengaluru buyer?

It matters because fund diversion, not bad intentions alone, is what historically stalled projects and trapped buyers' savings. In a market with many simultaneous launches, a promoter juggling several sites is exactly the situation the 70 percent rule is designed to discipline. When the account exists and the withdrawal controls are followed, the risk that your instalments vanish into an unrelated venture falls sharply.

It also gives you something to verify. Because the project must be RERA registered for these obligations to apply, confirming the registration is the first step, and our guide on how to verify a Karnataka RERA project shows where to look. A registered project is one where the separate account and the withdrawal discipline are legal requirements rather than goodwill.

What are the limits of the 70 percent rule?

The rule reduces risk, it does not remove it, and treating it as a guarantee is a mistake. It governs how money is held and drawn, but it cannot force demand, prevent approval delays, or make a weak developer competent. A project can still slow down for reasons that have nothing to do with fund diversion, and the account discipline does not by itself certify the quality of construction or the clearness of the land title. There is also the practical point that enforcement depends on the certifications being honest and the regulator acting on lapses, so the rule works best in combination with a developer who has something to lose and a project whose filings are kept current and specific rather than vague.

So use it as one layer of protection among several. Pair it with a reading of the agreement, a check of the approvals and the title, and attention to the promoter's track record. Our note on the builder buyer agreement clauses to read covers the contractual side, and together these checks matter more than any single reassurance a sales team offers.

How can you check it on a real project?

Start from the RERA registration, because that is where the obligation lives. On the regulator's portal, a registered project discloses details and files quarterly progress updates, which should show construction advancing in step with the money being drawn. If you are evaluating an active development such as Godrej Woodland on Sarjapur Road, cross check the brochure against the registered details and the latest progress filing rather than relying on the marketing suite alone.

You will not usually see the bank account itself, and you do not need to, because the control you can observe is the progress disclosure. A project where the registered status is current and the quarterly updates show steady work is one where the financial discipline is more likely being honoured. A project that is vague about its RERA status is one to question before you pay.

How should you use this when buying under construction?

Use it to turn a leap of faith into a set of checks. Confirm the project is RERA registered, read the quarterly progress updates, and match the stage of construction you see on site against what the filings claim. Treat a current registration and honest progress disclosure as a baseline requirement, not a bonus, and be wary of any under construction project that cannot show you both. A useful habit on a site visit is to photograph the stage of work and date it, then set that against the completion percentage in the latest filing, because a wide gap between what you can see and what is claimed is the kind of early warning that the 70 percent discipline is meant to surface.

Your under construction money safety checklist

1. Confirm the project is registered with the Karnataka RERA before you pay anything.
2. Note the registration number and look up the project on the regulator's portal.
3. Read the quarterly progress updates and compare them with what you see on site.
4. Understand that 70 percent of your money is meant to be ring fenced for this project.
5. Remember withdrawals are tied to completion and certified by three professionals.
6. Do not treat the rule as a delivery guarantee, pair it with title and approval checks.
7. Walk away from any project that is vague about its RERA registration status.

Frequently asked questions

What is the RERA 70 percent rule?

The RERA 70 percent rule requires a promoter to deposit seventy percent of the money collected from buyers of a project into a separate scheduled bank account. That money can be used only for the construction and land cost of the same project. It is designed to stop developers from diverting your payments to unrelated ventures, which historically stalled projects.

Can a builder withdraw the 70 percent whenever they want?

No, withdrawals from the separate account are controlled. A promoter can draw only in proportion to the percentage of the project that is actually completed, and each withdrawal must be certified by an engineer, an architect and a chartered accountant in practice. This ties the release of your money to real construction progress rather than to the builder's cash needs.

Does the 70 percent rule guarantee my project will be delivered?

No, it reduces a specific risk but does not guarantee delivery. The rule disciplines how your money is held and drawn, so it makes fund diversion harder, but it cannot prevent approval delays, weak demand or poor execution. Treat it as one layer of protection and pair it with checks on the title, the approvals and the developer's track record.

How do I check the rule is being followed?

Start from the project's RERA registration on the regulator's portal, because the obligation applies only to registered projects. Read the quarterly progress updates the promoter files and compare them with the construction you see on site. You will not see the bank account itself, but steady, current progress disclosures are the practical signal that the financial discipline is being honoured.

Last updated 2026-10-13. PropNewz Team.