The RERA 70 Percent Account: How Your Instalments Are Meant to Be Protected
Section 4(2)(l)(D) of the RERA Act requires promoters to keep 70 percent of allottee payments in a separate scheduled bank account for construction and land cost, with certified, progress-linked withdrawals and annual audits. This guide explains the rule, its limits and a seven-step check for Bengaluru buyers.
Every time a Bengaluru buyer pays an instalment for an under-construction flat, a rule written into the Real Estate (Regulation and Development) Act, 2016 is supposed to decide where most of that money goes. Seventy percent of the amounts a promoter collects from allottees for a project must sit in a separate account in a scheduled bank, to be used only for the project's construction and land cost, and withdrawn only as the project progresses. Buyers hear the phrase 70 percent account often. Few know what the law actually requires, what it can and cannot do, and how to use it before paying.
This guide reads the rule from the text of the Act itself, the version published in the Gazette of India and hosted on a state regulator's website, and sets out what a buyer can sensibly check.
The short answer. Section 4(2)(l)(D) of the Act requires the promoter to declare that 70 percent of amounts realised from allottees will be deposited in a separate account in a scheduled bank to cover the cost of construction and land cost, and used only for that purpose. Withdrawals must be in proportion to the percentage of completion, certified by an engineer, an architect and a chartered accountant in practice, and the promoter's accounts must be audited within six months of every financial year's end. The trade-off: the rule ties most of your money to your project and to verified progress, but it leaves 30 percent outside the account and depends on certifications you cannot easily see, so it reduces risk rather than removing it.
What exactly does Section 4(2)(l)(D) say?
Section 4(2)(l) lists declarations a promoter must make, supported by an affidavit, when applying for registration. Clause (D) is the declaration that seventy per cent of the amounts realised for the real estate project from the allottees, from time to time, shall be deposited in a separate account to be maintained in a scheduled bank to cover the cost of construction and the land cost and shall be used only for that purpose. The text is in the Gazette copy of the Act.
The explanation to the clause defines a scheduled bank as a bank included in the Second Schedule to the Reserve Bank of India Act, 1934. Three provisos then govern how money comes out of the account.
| Element of the rule | What the Act says | What it means for a buyer |
|---|---|---|
| Share deposited | 70 percent of amounts realised from allottees | Most of each instalment is ring-fenced |
| Where | A separate account in a scheduled bank | Your money should not sit in the promoter's general account |
| Permitted use | Cost of construction and land cost only | Not for other projects or unrelated spending |
| Withdrawal test | In proportion to percentage of completion, certified by engineer, architect and CA | Money should follow verified progress |
| Annual audit | Within six months after each financial year, by a CA in practice | A yearly check that funds were used for the project |
How can money be withdrawn from the account?
The first proviso says the promoter shall withdraw amounts from the separate account, to cover the cost of the project, in proportion to the percentage of completion of the project. The second proviso adds that withdrawals shall be made after it is certified by an engineer, an architect and a chartered accountant in practice that the withdrawal is in proportion to the percentage of completion.
The third proviso requires the promoter to get the accounts audited within six months after the end of every financial year by a chartered accountant in practice, and to produce a statement of accounts certified and signed by that accountant. During the audit, it must be verified that amounts collected for a particular project have been used for that project and that withdrawals complied with the proportion to the percentage of completion.
What does the rule not do?
It does not cover every rupee. By its own terms, the clause applies to 70 percent of the amounts realised from allottees. The remaining 30 percent is not covered by this clause. It also does not, by itself, give buyers a running view of the account's balance or withdrawals. The safeguards operate through professional certification and audit, which are obligations on the promoter.
And it does not guarantee completion. A project can still run short if costs rise, sales slow or the promoter defaults on other obligations. What the rule aims to prevent is diversion of most allottee money away from the project in the first place. If a registration is later revoked, Section 7(4)(c) directs the Authority to have the bank holding this account freeze it and then take further action, including de-freezing, to facilitate the remaining works under Section 8. PropNewz explained that sequence in our guide to revoked registrations.
Who is responsible if the rule is broken?
The promoter. The 70 percent rule is part of the declaration the promoter files, supported by an affidavit, as a condition of registration, and Section 7(1)(a) allows the Authority to revoke a registration where the promoter defaults in doing anything required under the Act. A buyer who believes money is being diverted can raise the issue with the Authority. For a broader view of what sits in a registration application, see our Section 4(2) filing checklist.
Professionals who certify withdrawals also matter. The second proviso names three certifiers: an engineer, an architect and a chartered accountant in practice. Their certificates are the link between your instalments and physical progress on site.
How should a Bengaluru buyer use the rule before paying?
Ask, compare and keep records. The most practical step is to ask the promoter, in writing, for the name of the scheduled bank and the account into which allottee payments for this project go, and to confirm that your payment will be made to it. Then compare your payment schedule against construction progress. If the demands are running well ahead of what you see on site, ask how the next withdrawal will be certified as proportionate to completion.
Timing matters as well. The most useful moment to ask these questions is before the agreement for sale is signed, because that is when you can still walk away without having paid more than the advance the Act allows. Once the payment schedule is running, the same questions remain valid, but your leverage is lower. A promoter who answers clearly and in writing about the account, the bank and how withdrawals are certified is giving you useful information about how the project is run.
It also helps to look at the project as a whole. Whether you are considering a large township or a single tower, such as projects listed on PropNewz like Brigade Eldorado in Bagalur, the account rule applies per registered project, so make sure your payment details match the specific registered phase you are buying in.
- Note the project's RERA registration number and phase.
- Ask in writing for the separate account's bank and account details.
- Pay instalments only into the account the promoter confirms.
- Keep receipts and bank proof of every payment.
- Compare demands with visible construction progress.
- Ask how withdrawals are certified as proportionate to completion.
- Raise concerns about diversion with the Authority promptly.
How does the account fit with other RERA protections on payments?
It works alongside a few other provisions that shape when and how much you pay. Section 13(1) says a promoter shall not accept more than ten per cent of the cost of the apartment, plot or building as an advance payment or application fee without first entering into a written agreement for sale with you and registering it. That caps what changes hands before the agreement. After the agreement, the 70 percent rule governs where most of your instalments go.
Progress information is the other half. Section 11(1) requires the promoter to create a web page on the Authority's website and keep updated, every quarter, the list of apartments or plots booked, the list of garages booked, the list of approvals taken and those pending after the commencement certificate, and the status of the project. Reading the quarterly status alongside your demand letters is the simplest way for a buyer to judge whether demands are tracking work on the ground, which is the same test the Act applies to withdrawals from the separate account.
None of these provisions requires you to become an auditor. They do give you a set of documents to ask for and compare, and a basis for raising concerns with the Authority if the pattern looks wrong.
Does the 70 percent rule apply to every project?
It applies through registration. Section 4 sets out what a promoter must file when applying to register a real estate project, so the declaration is part of every registered project. Projects outside registration, such as those exempt under Section 3(2) because they are small, do not file this declaration under the Act. That is one more reason to confirm registration before you book, and to check whether the specific phase you are buying is registered on its own.
Frequently asked questions
What is the 70 percent rule under RERA?
Section 4(2)(l)(D) of the Real Estate (Regulation and Development) Act, 2016 requires a promoter to declare that 70 percent of amounts realised from allottees will be deposited in a separate account in a scheduled bank and used only for the project's construction and land cost.
When can a builder withdraw money from the RERA separate account?
Only in proportion to the percentage of completion of the project, and after an engineer, an architect and a chartered accountant in practice certify that the withdrawal is proportionate to completion, according to the provisos to Section 4(2)(l)(D) of the Act.
Is all of my payment protected in the separate account?
No. The clause covers 70 percent of the amounts realised from allottees. The remaining 30 percent is not covered by this clause, and the rule reduces the risk of diversion rather than guaranteeing that a project will be completed on time.
What happens to the separate account if registration is revoked?
Section 7(4)(c) directs the Authority to have the bank holding the project account freeze it and then take further action, including de-freezing, to facilitate the remaining development works in accordance with Section 8 of the Real Estate (Regulation and Development) Act.
Last updated 2026-10-31. PropNewz Team.
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