Dues stuck, Noida authority plans escrow accounts for 59 developers

NOIDA: The Noida Authority has decided to open escrow accounts for 59 developers who have defaulted on payments. Officials said the move was aimed at recovering dues and curtailing its financial losses. Officials said many of the developers who defaulted on the payments were found to have diverted funds
to other projects. But when an escrow account is opened, the developer concerned is bound to deposit
50% of the funds collected from homebuyers and other sources. This will enable the Authority — which is reeling from losses — to withdraw some amount from the accounts when necessary. These accounts will be managed jointly by the developers and the Authority

Four such accounts have already been opened for projects under the JM Group (two projects), Nimbus
and Gulshan groups. Officials said they were in the process of opening 15-20 more over the next few
days.The commercial department of the Authority has been asked to open escrow accounts for more than 20
developers associated with Sports City. Although meetings have not yet been scheduled, the accounts are
expected to be operational from next month.
Officials expressed hope the move would not only address the issue of mounting losses , but also help buyers to get their properties registered once the dues were cleared. The Authority, the officials claimed,
hopes to recover over Rs 7,000 crore in dues from this move.

“The provision of opening escrow accounts has existed since UP-Rera was established. However, only a
few accounts were made operational in the past. The recent decision was taken following a discussion on
the issue of mounting dues,” said Swatantra Kumar, the finance controller. “The move will hold the
developers accountable for their financial obligations.”
Manoj Gaur, the Credai president in NCR and CMD of Gaurs Group, said escrow accounts was nothing
new. “The developers are willing to open the accounts. However, the Noida Authority should address our
demands for rationalising the dues first. When there is clarity on how the dues should be settled, many of
the projects may no longer require the accounts. The need for an escrow account arises when developers
seek to pay in installments,” he added.