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Money & Personal Loans

9 documents

Money lent between people, loan security, and the paperwork that keeps a personal debt provable and collectable.

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Lending and borrowing between individuals

Acknowledgement of DebtA debtor has admitted in writing that money is still owed, and you want that admission on paper before the right to sue for it lapses. Under s.18 of the Limitation Act, 1963, a signed, written acknowledgement of a subsisting liability made BEFORE the limitation period for recovering it expires starts a fresh period running from the date of acknowledgement — normally giving the creditor three more years under Article 1 of the Schedule to that Act. Made after the period has already expired, a bare acknowledgement does nothing; what is needed instead is an express written promise to pay, signed by the debtor, which s.25(3) of the Indian Contract Act, 1872 makes a valid and binding contract despite the debt being time-barred and despite there being no fresh consideration for the promise. This document asks which position you are in and prints the correct clause for it — get that answer wrong and the document may not do what you signed it for. Use it for money lent and not repaid, an unpaid running account, the price of goods or services not paid for, or a balance admitted after part-payment — between individuals, or between an individual and a business, in Punjab or Chandigarh. It is not a fresh loan agreement: it records and re-dates an existing debt, on repayment terms both sides now agree. If new security is being given for the debt, a separate hypothecation, mortgage or pledge document is needed — this one does not create security by itself. Not for a debt already reduced to a court decree (use execution proceedings instead), and not a substitute for a demand notice before a cheque-bounce complaint under s.138 of the Negotiable Instruments Act, 1881.₹399Open
Employee Loan AgreementAn employer is advancing money to an employee — for an emergency, a festival advance, relocation, education for a child, medical treatment, or simply as a benefit of employment — and wants recovery terms fixed before the money leaves the account. Recovery is usually by deduction from monthly salary, and that deduction is itself regulated: s.7 of the Payment of Wages Act, 1936 permits deduction for recovery of an advance or loan, but s.7(3) caps total deductions from any one wage period, and s.12 fixes how an advance of wages may be recovered. Get the recovery schedule wrong and the deduction itself becomes unlawful, whatever this Agreement says. There is also a tax dimension most employers miss: an interest-free or concessional loan from an employer is a taxable perquisite in the employee's hands under s.17(2)(viii) of the Income-tax Act, 1961 read with Rule 3(7)(i) of the Income-tax Rules, 1962, valued at the State Bank of India's lending rate on a loan of that type, less any interest actually charged — except where the aggregate outstanding loan does not exceed Rs 20,000, or the loan is for treatment of specified diseases under Rule 3A, in which case no perquisite value is added. This Agreement records that position so payroll can act on it correctly. For a loan an employer makes to its own staff, in Punjab or Chandigarh. Not for a loan between two individuals who are not employer and employee — use the Acknowledgement of Debt or a general loan agreement instead — and not for statutory retirement dues (gratuity, provident fund) or for an advance against expenses to be reimbursed, which are not loans at all.₹399Open
Loan Agreement between Friends and RelativesMoney is about to be lent between two people who know each other — friends, relatives, or colleagues — and you want the terms fixed in writing before it is handed over: how much, for what, whether interest runs, and how and when it comes back. This is a forward-looking contract, signed when the loan is made. It is not the Acknowledgement of Debt, which records a debt that already exists and re-dates it for limitation purposes; use that instead if money was lent earlier, on trust, with nothing signed. It is not the Employee Loan Agreement, which is written for an employer advancing money to its own employee and recovering it through payroll. And it is not a Loan Agreement Against Property, which secures the loan by a mortgage of immovable property and needs its own ad valorem stamping and registration — if real security of that kind is intended, use that document instead, or add a separate mortgage or hypothecation deed alongside this one. A written loan agreement matters for more than good manners between relatives. Under Order XXXVII of the Code of Civil Procedure, 1908, a suit to recover a fixed sum due under a written contract can use the summary procedure, which is materially faster than an ordinary civil suit — a benefit a purely oral loan does not carry. Under s.269SS and s.269T of the Income-tax Act, 1961, a loan or its repayment of Rs 20,000 or more must not be taken or repaid in cash — this document says so and records the mode actually used. Not for a loan from a bank, NBFC or housing finance company (their own loan documentation and RBI-mandated disclosures apply), and not for money advanced in the course of running a money-lending business — a one-off loan between people who know each other is what this document is for.₹399Open
Promissory Note (Pronote)A short, formal, unconditional written promise by one person (the Maker) to pay a fixed sum of money to another (the Payee) — on demand, on a fixed date, or a fixed number of days after the note — signed by the Maker alone. Because it meets the definition of a promissory note in s.4 of the Negotiable Instruments Act, 1881, it is a negotiable instrument in its own right, and a suit to recover the amount due on it can use the summary procedure under Order XXXVII of the Code of Civil Procedure, 1908, which is materially faster than an ordinary suit. Deliberately brief. A pronote's strength is its simplicity — a plain, unconditional undertaking to pay, nothing more — so this is not the place for repayment schedules, security or default clauses of the kind a Loan Agreement carries. Use this alongside a Loan Agreement between Friends/Relatives where the loan has fuller terms (interest, instalments, security) and the note is taken in addition as the clean payment instrument; or use it alone for a simple, short loan or IOU where nothing more elaborate is needed. Not the Acknowledgement of Debt, which records a debt that already exists rather than making a fresh promise to pay. Not a cheque, and non-payment of this Note does not carry the criminal exposure a dishonoured cheque carries under s.138 of the same Act — that consequence is specific to cheques and this document does not create it. Not for a loan from a bank, NBFC or housing finance company.₹399Open
Money ReceiptA simple, signed acknowledgement that a specific sum of money has been received by one person from another — proof of what was paid, by whom, to whom, on what date, by what mode, and what it was for. Use it for a loan instalment or a full repayment, a part-payment towards a larger debt, an advance, a reimbursement, payment for goods or services, or a gift — any person-to-person payment this library does not already have a purpose-built receipt for. This is the general-purpose one. If the payment is a security deposit, an earnest money deposit, a token booking amount, rent, or another payment already covered by a purpose-built receipt elsewhere in this library, use that one instead — it carries the property or tenancy content this general receipt does not. Not the Acknowledgement of Debt, which records money still OWED — this document runs the other way and records money already PAID. Where this receipt is for repaying a loan made under a Loan Agreement, a Promissory Note or recorded in an Acknowledgement of Debt, name that document in the field provided so the two papers read together.₹99Open
Recovery Notice (Money Due)A formal, written demand to someone who owes you money — under a loan, a promissory note, the unpaid price of goods or services, or professional fees — before you sue to recover it. Sets out what is owed, how it arose, the interest claimed, and a clear deadline to pay, so the Recipient cannot later say no demand was made and so the notice itself becomes evidence if the matter goes to court. Purpose-built for a plain money debt, which is why it carries content the library's other notices do not: how the debt is computed, the interest position, and the fact that a suit on a written loan document, a promissory note, or a bill of exchange may qualify for the summary procedure under Order XXXVII of the Code of Civil Procedure, 1908 once a suit is filed. Not the Cheque Dishonour Legal Notice, which is the mandatory notice s.138 of the Negotiable Instruments Act, 1881 requires after a cheque bounces, with its own strict timetable and its own criminal consequence — use that one instead if a cheque has bounced, even if the underlying debt is the same one this notice would otherwise cover. Not the Legal Notice for Recovery of Arrears, which is written for arrears of commercial rent under a lease. Not the Legal Notice (General Purpose), this library's catch-all for a civil wrong with no purpose-built notice of its own — that one can be used for a money debt too, but carries none of the debt-specific content this one does. Pairs naturally with the Cheque Dishonour Legal Notice as the two notices behind most private debt recovery: this one for the underlying debt, that one if a cheque given towards it is later dishonoured.₹99Open

Chit funds and savings committees

Committee (Chit) AgreementA group of people are running a "committee" or "kameti" — a chit — where each subscriber pays a fixed instalment every month, one subscriber takes the pooled amount each month by auction or by lot, and the person organising it (the foreman) wants the whole arrangement, and everyone's obligations under it, on one signed paper. A chit of this kind is not a private arrangement outside the law merely because it runs among friends, relatives or shopkeepers: the Chit Funds Act, 1982 governs every chit, defines the foreman's and subscribers' rights and obligations, requires the chit to have the previous sanction of the State Government (or the officer authorised in that behalf) before it is commenced, requires the chit agreement to be filed for registration with the Registrar of Chits for the area before the first instalment is collected, and caps the foreman's commission at 5% of the chit amount under s.21. Running an unregistered or unsanctioned chit is an offence under the Act, not merely a paperwork gap — confirm the sanction and registration position with the Registrar of Chits before collecting a single instalment, not after. For a chit conducted in Punjab or Chandigarh, whatever it is called locally — kameti, beesi, bhishi or committee. Not for a rotating informal arrangement with no foreman and no auction or draw (which may not be a "chit" within the Act's definition at all — check with the Registrar of Chits) and not a substitute for the statutory Form of Chit Agreement in the Second Schedule to the Act, which the Registrar will in any event require in the prescribed form for filing; use this document to record the same terms between the parties and adapt its content to that prescribed form before filing.₹399Open

Security and collateral for a loan