Loan Repayment Undertaking

A promissory note (রুক্কা / প্রমিসরি নোট) is a written unconditional undertaking by one party (the maker) to pay a certain sum of money to a specified payee (or bearer) either on demand or on a fixed / determinable future date. Under Section 4 of the Negotiable Instruments Act, 1881, the instrument must be signed by the maker and contain an unconditional promise, a definite sum, and a named payee. Being a negotiable instrument, it is transferable by endorsement, enjoys presumption of consideration under Section 118, and enables a summary suit under Order XXXVII of the Code of Civil Procedure, 1908 — a faster recovery route than an ordinary money claim.

Stamp & registrationA promissory note requires adhesive stamp duty under Schedule I of the Stamp Act, 1899 — the correct denomination varies with the note amount (typically Tk. 10 to Tk. 100 revenue stamps affixed and cancelled by the maker's signature across them). An improperly-stamped promissory note is inadmissible in evidence under Section 35 of the Stamp Act. Registration is not required. Never write the amount in figures only — always write it in both figures and words to prevent alteration.

What this agreement typically contains

Place and date of execution
Maker (borrower) full name, father name, address, NID
Payee (lender) full name, address, NID
Principal sum in figures and words
Interest rate per annum (if any) — subject to the Money Loan Court Act cap
Date of payment — on demand, or fixed date
Adhesive revenue stamp affixed and cancelled with signature
Maker's signature (must cross the revenue stamp)
Two witnesses' names, addresses, and signatures

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Frequently asked questions

Is a promissory note valid if I forget to stamp it?: Under Section 35 of the Stamp Act, 1899 an unstamped or under-stamped promissory note is inadmissible in evidence — a court will not receive it to prove the debt. Unlike some other instruments there is no impounding-and-payment-with-penalty remedy for promissory notes under Section 35. This makes stamping absolutely critical. If you discover the omission later, the practical fix is to execute a fresh, properly-stamped note. Never rely on an unstamped promissory note — the borrower can defeat recovery simply by objecting to its admissibility.
What is the maximum interest rate I can charge on a promissory note?: The Bangladesh Bank's prescribed private-lending rate is the reference; for court recovery under the Money Loan Court Act, 2003 (Artha Rin Adalat Ain), courts typically limit awardable interest to reasonable commercial rates and may strike down excessive interest as usurious under the Usurious Loans Act, 1918. In practice, rates between 12-18% per annum are commonly accepted; anything above 24% invites judicial scrutiny. Compound interest requires an express clause. Failure to specify a rate defaults to simple interest at the court's discretion, usually 6-8% per annum.
What is the difference between a promissory note and a loan agreement?: A promissory note is a negotiable instrument (Section 4 NI Act) — a one-sided unconditional promise to pay, transferable by endorsement, with a presumption of consideration and a summary-suit remedy under Order XXXVII CPC. A loan agreement is a bilateral contract that lays out the full terms (purpose, disbursement, security, covenants, default, dispute resolution). For simple, personal loans the promissory note alone suffices; for structured lending (with collateral, staged disbursement, or covenants) a separate loan agreement plus a promissory note is safer. The two instruments coexist and give the lender both a fast recovery route and detailed contractual terms.

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What this agreement typically contains

Place and date of execution

Maker (borrower) full name, father name, address, NID

Payee (lender) full name, address, NID

Principal sum in figures and words

Interest rate per annum (if any) — subject to the Money Loan Court Act cap

Date of payment — on demand, or fixed date

Adhesive revenue stamp affixed and cancelled with signature

Maker's signature (must cross the revenue stamp)

Two witnesses' names, addresses, and signatures

Frequently asked questions

Is a promissory note valid if I forget to stamp it?

Under Section 35 of the Stamp Act, 1899 an unstamped or under-stamped promissory note is inadmissible in evidence — a court will not receive it to prove the debt. Unlike some other instruments there is no impounding-and-payment-with-penalty remedy for promissory notes under Section 35. This makes stamping absolutely critical. If you discover the omission later, the practical fix is to execute a fresh, properly-stamped note. Never rely on an unstamped promissory note — the borrower can defeat recovery simply by objecting to its admissibility.

What is the maximum interest rate I can charge on a promissory note?

The Bangladesh Bank's prescribed private-lending rate is the reference; for court recovery under the Money Loan Court Act, 2003 (Artha Rin Adalat Ain), courts typically limit awardable interest to reasonable commercial rates and may strike down excessive interest as usurious under the Usurious Loans Act, 1918. In practice, rates between 12-18% per annum are commonly accepted; anything above 24% invites judicial scrutiny. Compound interest requires an express clause. Failure to specify a rate defaults to simple interest at the court's discretion, usually 6-8% per annum.

What is the difference between a promissory note and a loan agreement?

A promissory note is a negotiable instrument (Section 4 NI Act) — a one-sided unconditional promise to pay, transferable by endorsement, with a presumption of consideration and a summary-suit remedy under Order XXXVII CPC. A loan agreement is a bilateral contract that lays out the full terms (purpose, disbursement, security, covenants, default, dispute resolution). For simple, personal loans the promissory note alone suffices; for structured lending (with collateral, staged disbursement, or covenants) a separate loan agreement plus a promissory note is safer. The two instruments coexist and give the lender both a fast recovery route and detailed contractual terms.