1) your friend should send letter or email to you requesting for loan
2) in reply you can agree to give him a loan . time period within loan is to be repaid is to be mentioned .
3) interest rate on loan is to be mentioned and also whether payable monthly or on quarterly basis
4) no need to register loan agreement
5) transfer of funds should be by cheque . dont pay cash
6) you can ask your friend to give post dated cheque for loan amount