Introduction:
The Real Estate (Regulation and Development) Act, 2016 (RERA) is a legislation enacted by the Government of India to regulate the real estate sector and protect the interests of homebuyers. It aims to bring transparency, accountability, and efficiency to the real estate market.

Designated Account under RERA:
Under RERA, developers are required to deposit a certain percentage of the total cost of the real estate project into a designated separate bank account. This provision ensures that the funds collected from homebuyers are utilized only for the specific project and not diverted to other purposes.

Percentage of Payment to be Deposited:
According to RERA, developers are mandated to deposit a minimum of 70% of the amount realized from homebuyers into a designated separate bank account. This percentage applies to payments received for both sale agreements and construction agreements.

Reasoning behind the 70% Requirement:
The requirement of depositing 70% of the funds into a designated account serves multiple purposes:

1. Consumer Protection: This provision ensures that a significant portion of the funds collected from homebuyers is safeguarded and can only be used for the development of the specific project. It prevents developers from diverting the funds to other projects or personal use, thus protecting the interests of homebuyers.

2. Timely Completion: By depositing a substantial portion of the funds into a designated account, developers are encouraged to complete the project within the agreed-upon timeline. This provision prevents delays in project completion, as the funds required for construction and development are readily available.

3. Financial Discipline: Requiring developers to deposit 70% of the funds into a designated account promotes financial discipline and transparency. It ensures that developers have sufficient funds to complete the project and reduces the risk of financial mismanagement or insolvency.

4. Project Viability: The provision also serves as a measure to assess the financial viability of the project. If a developer is unable to raise sufficient funds to deposit the required percentage, it may indicate financial instability or lack of adequate planning, which could be a warning sign for potential homebuyers.

Conclusion:
Under RERA, developers are legally obligated to deposit at least 70% of the funds received from homebuyers into a designated separate bank account. This provision aims to protect the interests of homebuyers, ensure timely completion of projects, promote financial discipline, and assess the financial viability of the project.