1) you should never advance money to a friend
2) if he is unable to friend it would ruin your friendship if you take legal proceedings
3) number of banks giving loans
4) further if your friend needs money against insurance policy he can obtain loan from the insurance company against his policy
5) if you still want to give loan obtain letter from friend that he will repay loan within X period .
4) further it should mention interest amount payable on the loan . loan amount should be given by cheque only
5) obtain post dated cheque for loan amount or promissory note
6) you will have to file summary suit if he fails to repay the loan