The real estate industry plays a pivotal role in the lives of the common man, as it provides the foundation for shelter, investment, and financial stability. It is a linchpin of the economy, shaping GDP, generating employment, and driving economic growth. However, certain issues have been observed in the behaviour of specific participants within the sector.
Litigation within the sector has seen a notable increase, with cases reaching the Supreme Court. The Supreme Court has issued significant judgments in these cases. Additionally, both the Union and State Governments have introduced the RERA Acts and corresponding guidelines to ensure the timely and proper completion of real estate projects. While the RERA Act and guidelines have contributed to improving the conduct of the sector, buyers and lenders may still find themselves on the brink of protracted legal battles when trying to recover their investments in case of issues.
The present protocol seeks to utilize blockchain technology for the purpose of enhancing efficiency within the Real Estate ecosystem while adhering to the RERA Act. This strategy grants all stakeholders, which encompass the RERA authority, financial institutions, and purchasers, the ability to actively monitor project progress, potentially diminishing the necessity for resolution through the RERA authority, Consumer Forums, or the legal system. As a result, this could result in more punctual project completions in alignment with RERA regulations.
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The execution of the process flow for RERA projects will differ from one state to another. Moreover, the State’s officially designated RERA Authority must authorize the implementation of this process flow. Even though the execution in a specific state can be adjusted to comply with the regulations and guidance provided by the respective authorities, the foundational definition of the smart contract will remain constant, with alterations limited to the sequence of events.
The seamless management of funds can be achieved by mandating that all involved parties adhere to the procedures outlined by RERA. Such a practice would guarantee that the allocated funds are solely utilized for their intended purposes. Moreover, this approach would guarantee that all stakeholders receive prompt and transparent project updates, subsequently promoting timely project completion and financial gains for everyone involved.
There are Multiple Problems faced in Real Estate Transactions:
* RERA Account Journeys between RERA Authority, NBFC, Banks , Buyers and other participants is manual – RERA Ecosystem relies heavily on manual activities, processes and traditional methodology wherein builder control on information is too high.
* Cash Flow Monitoring for other stakeholders is Difficult – Though Chartered Accountants (CAs) are expected to issue certificates but multiplicity of accounts, receivables and other details create opportunities for misrepresentation to CAs.
* Managing Fragmented Payables and Receivables – While buyer funds are received in dedicated a/c, lender funds are disbursed from another a/c resulting in the need for double reconciliation.
* Leading to opportunity for mistake in fund management or fund diversion – As buyer is managing funds across various accounts, there is potential for errors in fund management or fund diversion.
* Business Loss due to Delays and Complexities – There is a business loss due to funds held in escrows on account of lack of details available with a particular party.
Real estate faces challenges in Regulatory, Liability of Bank, Project Based Lending and Coordination which can be simplified by Making Multi-Party Transaction Ecosystem using Escrow Accounts and we are enabling the same at TransBnk.
* Same View Across Parties– As a single system is maintaining & interacting with the system, all parties have the same status across the system.
* Dashboard for all Parties – All parties can view the dashboard and verify their respective details and Increase in transparency vastly reducing chances of misreporting by any party.
* No Fund Diversions – All funds deposited by the buyer & disbursed by the lender are mapped on real-time basis and the same view of inward received & expense done is available to CA, lender, buyer and RERA authorities ensuring that no differential reporting is possible.
* Fund Release – CA, Engineer & Architect to directly fill the necessary details online & digitally sign documents to ensure correctness.
* Reports – MIS & other reports for the consumption of lender, builder, CA & other stakeholder are available and customised reports are available.
(By Mr Vaibhav Tambe, Founder & CEO, TransBnk. Views are personal)
