IANS

New Delhi, Aug 4: To bring transparency in the realty sector, Associated Chambers of Commerce and Industry of India (Assocham) has suggested that it be made mandatory for real estate developers to open escrow accounts.

Escrow accounts offer a safe avenue to buyers of property since payments for purchase of an apartment or similar real estate are deposited in them and paid to the developer only after the project is complete and the possession handed over.

"It will ensure that loans granted to developers for development of real estate projects are utilised for the purpose for which they are granted," said Assocham president Sajjan Jindal, commenting on the recommendations that have been handed over to the government.

The chamber said such accounts can also be used for payment of property charges, insurance liabilities and maintenance charges on a regular basis.

"Mistrust towards all key stakeholders continues to hamper real estate growth," Jindal said.

According to him, this mistrust depresses consumer confidence and delays purchase decisions, while also limiting the entry of major international players to bring competition and best global practices to the industry.

"Therefore, there is a need for an efficient and focused regulatory body to oversee functioning of the real estate sector in order to ensure industry development and safeguard consumer interests in line with international benchmark," he said.

In addition, the chamber also suggested that developers and other stakeholders including consumers adhere to the norms laid down for real estate funding and credit by Reserve Bank of India and National Housing Bank.

Assocham also requested the authorities to ensure that all development charges are used for the projects for which they are collected.