• Promissory note for lending money

My neighbor who is a farm owner requested some money from me for some farming related activities. I would like to loan him the money at 0% interest. But, what documentation do I need to collect to ensure that I can recover the principal? I was told that I need a promissory note. Do I need this signed in front of a notary and what revenue stamp do I use. The loan amount is 50000
Asked 4 years ago in Civil Law

3 answers received in 10 minutes.

Lawyers are available now to answer your questions.

15 Answers

Rs. 1 revenue stamp must be used. And promissory note need not be notarized. It should be signed by both parties.

Abhilasha Wanmali
Advocate, Nagpur
1022 Answers
1 Consultation

4.8 on 5.0

Hi, it is rather advised to obtain a PDC cheque from him ... Also it is recommended to transfer the amount through bank transaction instead of giving cash ... If the cheque gets dishonoured , you can file a criminal complaint under section 138 NI act

Hemant Chaudhary
Advocate, Gurgaon
4623 Answers
67 Consultations

4.9 on 5.0

Don’t lend any money

2) ask your neighbour to obtain personal loan

3) if you lend money chances of recovery are bleak as litigation in India is long drawn and expensive proposition

4)if at all you want to lend money ask him to give in writing tha he would repay the money in x period and won failure to repay the money he would be liable to pay interest at 18 per cent

5) obtain post dated cheque from your neighbour for loan amount

6) you can obtain promissory note for the loan amount

Ajay Sethi
Advocate, Mumbai
88406 Answers
6234 Consultations

5.0 on 5.0

Sir take a Post dated cheque from the owner and take a promissory note so in the case of cheque recovery will be easy. Rs. 1 stamp can be fixed.

Shubham Jhajharia
Advocate, Ahmedabad
25516 Answers
179 Consultations

5.0 on 5.0

Enter into a loan agreement instead of taking recourse to PDC arrangement.

Get the repayment period mentioned in the loan agreement and take a PDC as security.

The above arrangement safeguards your interest in a much better way.

Vibhanshu Srivastava
Advocate, New Delhi
9441 Answers
245 Consultations

5.0 on 5.0

The first thing you should do before giving a loan to relative or friend is bind them legally with a documentary evidence. The documentary evidence could be of two types

(1) Promissory Note

(2) Loan Agreement.

Both these documents are legal documents and valid as a legal proof.

Promissory Note – Promissory Note is a simple document which contains promise of paying loan amount by fixed date by the borrower. A promissory note can be taken on stamp paper of Rs.100.

(i)Once this promissory note is made it is mandatory to get it notarized from the advocate.

(ii)The advocate will take small fees for the notary.If advocate is not available you can simply put revenue stamp and sign on that.

(iii)Promissory note can be hand written document.Once promissory note is singed it is kept by lender.

(iv)You should use full name as appear in PAN card or voter ID document.Make sure to mention date and place clearly in the promissory note.

it is advisable to get this documents signed in the presence of witness.

Loan Agreement – Loan agreement is a contract between lender and borrower. A loan agreement is detailed document contains terms and condition and all legal aspects of the loan. The loan agreement contains detail about loan amount, interest rate, time period, terms in case of default, loan disbursement details, Amortization Schedule and undertaking.

(i) Loan agreement requires signature of both lender and borrower.

(ii)Loan agreement should mention clearly interest rate, time period for payment and other terms clearly.

(iii)Loan agreement should be registered or notarized by the advocate.

Never give loan in cash. Always carry out the transaction through a bank cheque and mention the cheque number in the agreement.

Mohammed Mujeeb
Advocate, Hyderabad
19031 Answers
32 Consultations

4.5 on 5.0

1. Instead of promissory bond, Make a lender agreement including all the terms and conditions.

2. Accept the PDC as security.

Advocate, Bangalore
844 Answers
9 Consultations

4.9 on 5.0


Witness is not required for the promissory note.

Instead what you can do is, you can ask him to sign a document saying that this much amount is being taken and against which a cheque is being given. If he fails to return the money within the specified time then you will have the liberty to get the cheque encashed.


Anilesh Tewari
Advocate, New Delhi
17942 Answers
377 Consultations

5.0 on 5.0

The easiest way is to take a post dated cheque of rupees 50000 from him and also get a loan Agreement without interest executed between the parties, in presence of 2 witnesses.

After that, the agreement should be notarized or registered.

Siddharth Jain
Advocate, New Delhi
6010 Answers
101 Consultations

5.0 on 5.0

Dear Sir,

You can take following two documents:

1. Blank signed cheque or signed undated cheque with amount or signed post dated cheque with amount.

2. Promisory note with Rs.2/- revenue stamped on the prescribed format signed by two persons.

Netravathi Kalaskar
Advocate, Bengaluru
4952 Answers
27 Consultations

4.8 on 5.0

1. Make him execute a promissory note so that in case of default you may file a summary civil suit for recovery of money against him.

2. Also take post dated cheques from him.

Ashish Davessar
Advocate, Jaipur
30763 Answers
972 Consultations

5.0 on 5.0

You can obtain a promissory note signed by the borrower in the presence of two witnesses, notary's signature is not necessary.

Alternately you can even obtain a loan agreement executed by him on a non-judicial stamp paper in presence of two witnesses.

T Kalaiselvan
Advocate, Vellore
78567 Answers
1557 Consultations

5.0 on 5.0

Dear Sir,

It is better to take signed cheque instead of promissory note or along with promissory note otherwise you require atleast 3-4 years time to recover money under promissory note if your friend contest the suit which you may file afterwards. The Proforma of Promissory Note is as follows:


Writing Your Own Promissory Note

Meet the required elements to create an enforceable promissory note. In order to be enforceable, the note must include certain elements. Without any these you may not be able to collect the money you loaned out.[1]

The amount of the loan — the amount that is borrowed and owed.

Repayment dates — the date payments are due or the loan must be repaid.

Interest rate — the rate charged or paid on borrowed money. Interest rates are calculated in terms of annual percentage rate or APR.

Amount after interest has been applied or PI (principle + interest).

The Pledge of Security Agreement or Collateral hold. List any goods or services and the value used as a guarantee of the debt to be paid.

Terms for late or missed payments, if applicable.

Default terms — what will happen if the borrower fails to repay in a timely manner.


Kishan Dutt Kalaskar
Advocate, Bangalore
6055 Answers
385 Consultations

4.8 on 5.0

Hi sir,

Taking promissory note or taking a blank cheque from that’s well and good because in future if he turns out... we can contest the case on blank cheque and also make an affidavit in a non judicial stamp paper and signed by two witnesses on from his friend and other from your side.... then it’s well and good case.

For further details do call me

Koushalya Pattan
Advocate, Bangalore
174 Answers

Not rated

Dear Sir

The following security things needs to be taken while granting hand loan.

Get one promissory note signed by them on a bond paper with proper drafting. If he fails this becomes a civil case hence it is time consuming and lengthy process to recover.

You also take a blank cheque. This is criminal action on failure to honour the cheque. The recovery process is very faster and easier.

The above two are sufficient for the stake of Rs 50,000/-

Feel free for any assistance.



Shettar SS
Advocate, Bangalore
182 Answers
1 Consultation

4.4 on 5.0

Ask a Lawyer

Get legal answers from lawyers in 1 hour. It's quick, easy, and anonymous!
  Ask a lawyer