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The Demand Letter for Foreclosure is a crucial document in the Indian banking and financial services sector, used when a borrower defaults on their loan obligations. This document is primarily governed by the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act (SARFAESI Act), 2002, and related banking regulations in India. It serves as the first formal step in the foreclosure process, requiring specific content and format to ensure legal compliance. The letter must include detailed loan account information, default particulars, demand for payment, and consequences of non-payment. It provides the borrower with a statutory 60-day period to regularize the account before the lender can initiate enforcement actions. The document's proper execution is critical for banks and financial institutions to legally proceed with security enforcement and asset recovery.

1. Sender Details: Full name, address, and status of the lending institution/secured creditor

2. Recipient Details: Full name and address of the borrower(s)/guarantor(s)

3. Subject Line: Clear reference to the loan account and purpose of the letter

4. Loan Account Details: Specific details of the loan account including account number, date of sanction, and original loan amount

5. Default Statement: Clear statement of the default, including the amount in default and date since when the account has been non-performing

6. Outstanding Amount: Detailed breakdown of the total outstanding amount including principal, interest, penalties, and other charges

7. Demand for Payment: Clear demand for full payment of the outstanding amount within the specified statutory period (60 days under SARFAESI Act)

8. Security Details: Description of the mortgaged property/secured assets

9. Legal Consequences: Statement of legal actions that will be taken upon non-payment, including enforcement of security interest

10. Statutory Warning: Warning about restrictions on transfer of secured assets after receipt of notice as per Section 13(13) of SARFAESI Act