The Noida Authority will soon start issuing notices to developers of estate projects that are delayed and who have not yet opened escrow accounts. Through this move, the authority expects to collect over Rs 7,000 crore pending dues from builders, officials aware of the matter said.
The Noida Authority, the body in charge of developing and maintaining the Delhi satellite city, had in June 2023 issued directions regarding the opening of escrow accounts—to be jointly managed by the developer and the authority—for delayed projects but only a few have complied so far. According to the authority there are nearly 60 builders whose projects are running behind schedule.
Apprised of the high level of non-compliance with this mandatory exercise, Noida Authority CEO Lokesh M had last month convened a meeting of real estate developers and had warned them of strict action if they did not open escrow accounts for each of their projects.
The official said that non-litigated builder dues towards the authority amount to over Rs 7,000 crore, which the authority aim to recover through this mechanism. He said that opening of escrow accounts is aimed to discourage misuse of funds by the builder.
Being jointly operated, it will be difficult for developers to divert funds to other projects or purposes. Officials said that there have been many instances where developers redirected funds to other ventures, which delayed the projects in Noida and also led to defaults on land cost payments to the authority.
As per the terms, 50 percent of the funds collected for a project should be put into this account. However, the amount to be put in the escrow account will vary on a case-to-case basis depending on the dues against a project and the amount collected from buyers.
