What documents should I take from borrower

anil Kumar (Querist) 30 May 2018 This query is : Resolved
Respected Judicial teams..

I have a small quiery..

One of my friend is asking credit of 2 lakhs on interest basis..

So what should and how I have to give him with proper documentation..

Please give a clear idea about this..

If he failed to repay so I should be in a position to go legally..for my safety purpose.

Please mention all the documents from him to be signed by him or also witness ??

Thanks in advance.
Dr.ameer

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Ms.Usha Kapoor (Expert) 31 May 2018

Your friend can obtain personal loan from bank if he so desires

2) if you want to give loan give loan by cheque

3) obtain acknowledgement of receipt of loan

4) obtain letter from friend that loan would be repaid in x period with interest

5) take post date cheque for loan amount and interest

Message likes : 1 times

Sudhir Kumar, Advocate (Expert) 31 May 2018
Money given to friends and relatives is always a charity in the garb of loan which is given in expectation of refund but always taken with intention of non-refund.

Such loan is taken by a person:-

(i) Who lacks business sense and cannot raise funds out of his own business and suddenly wants to be rich.

(ii) who cannot raise bank loan because :-

Either
he himself is not creditworthy

Or
the purpose for which he seeks loan is illegal

or
the purpose for which he seeks loan is not at all commercially viable.

(iii) Who knows he can afford not to refund.
(iv) Who trusts his thick skin
(v) Who intends not to refund
(vi) Who has made fortification against action of refund.

So he has to find someone who can part with his money. SO he finds a lender near him (friend or relative)

Such loans are given by the persons :-

(i) Who has surplus money.
(ii) Who displays and boasts of such surplus money.
(iii) Who stupidly believe that there will be a refund.
(iv) Fails to realise as to why he alone (not bank) is being contacted for loan.
(v) Who has extreme trust on the debtor
(vi) who are either stupid or extremely greedy of the unusual (or illegal) rate of interest.

Such loans are always given

(i) Without documentation.
(ii) Without witness
(iii) Without guarantor.
(iv) During cordial relations

Soon after giving such loan :-

(a) Relations are no more remain cordial
(b) Business started by such money (easy money belonging to other) invariably fails.
(c) Such loans always sink and not refunded.
(d) Person seeking such refund suffers at legal process.
(e) Person seeking such refund legally or by persualtion is socially criticised.

Dr J C Vashista (Expert) 01 June 2018
No documents are required for charity.

Guest (Expert) 01 June 2018
Friendship and legal documents, both can't go together. Either you don't call him friend for the purpose of commercial transaction, or if you feel him to be a real friend must have some element of trust and faith on him without undergoing any formality legal documents.

Sudhir Kumar, Advocate (Expert) 01 June 2018
Te views expressed by Mr Dhingra in one sentence are irrefutable peace of wordly wisom.

I can just add that whether you have or do not have agreement. You cannot recover money from friend/relative. If you try to recover you may get some refund but for sure he will no mor ebe friend/relative.

So if you have to retain relations either give no money or expect no refund.

Guest (Expert) 01 June 2018
Friendship is a rare commodity in this world. A true friend is not expected to think a commercial or legal terms for dealing with a friend. If you have commercial or legal thinking in transaction, you can never be a friend of anyone. You can't also expect any friendly help from the other fellow. You can't evaluate moral values of friendship.

So, to give or not to provide any timely monetary help to the fellow or to have sacred relation of friendship is your own discretion.

Ms.Usha Kapoor (Expert) 06 July 2018
Agree with Sudhir Kumar.

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