Loan Agreement Between Friends / Family

The single most common source of bitter family and friendship disputes in Bangladesh is money lent informally and never repaid. A written loan agreement between friends or family is not a sign of distrust — it is the courtesy that protects the relationship: it forces both sides to agree, in writing and on record, exactly what is being loaned and when it will come back, which is the only way to prevent the classic dispute six months later over 'was that a loan or was it a gift'. The structure is the same as any personal loan agreement — principal, whether interest applies (many family loans are interest-free), repayment schedule, and consequences of default — but the tone can be less formal and it's often prudent to have a mutually respected witness sign as well.

Stamp & registrationTk. 300 non-judicial stamp is the standard, with two witnesses. Even a family loan is fully enforceable under the Contract Act, 1872 — the informal relationship of the parties does not weaken the document's legal effect. If the loan is interest-free, say so explicitly; if it carries interest, write the rate.

What this agreement typically contains

Lender's and borrower's identity + their relationship (optional)
Principal loan amount in figures and words
Interest — usually 0% for family; state the rate explicitly either way
Repayment schedule (single lump-sum date OR clear instalment plan)
Payment mode (bank / MFS / cash)
Late-payment consequence, if any
Witness details — often a mutually respected family member or friend
Signatures of lender, borrower and witness

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Frequently asked questions

Is a written loan agreement between family members legally enforceable?: Yes, fully. The Contract Act, 1872 treats a loan agreement between family members exactly like any other loan agreement — the personal relationship of the parties does not weaken enforceability. If the borrower does not repay, the lender can file a civil suit for recovery of money on the strength of the signed document. Bangladesh's statute of limitations for a money-recovery suit is short (a fixed number of years from the date the loan became due), so confirm the current limitation period with a lawyer before delaying — waiting too long will bar the recovery entirely.
Should I take my brother's / friend's money-lending to court if it fails?: That is your judgment call, but the written agreement gives you options either way. Many family-loan disputes are resolved by first attempting reconciliation, then a formal legal notice, and only then filing suit. Having the signed agreement in hand strengthens each stage — a good legal notice with attached agreement is often enough to prompt repayment without a court process.

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What this agreement typically contains

Lender's and borrower's identity + their relationship (optional)

Principal loan amount in figures and words

Interest — usually 0% for family; state the rate explicitly either way

Repayment schedule (single lump-sum date OR clear instalment plan)

Payment mode (bank / MFS / cash)

Late-payment consequence, if any

Witness details — often a mutually respected family member or friend

Signatures of lender, borrower and witness

Frequently asked questions

Is a written loan agreement between family members legally enforceable?

Yes, fully. The Contract Act, 1872 treats a loan agreement between family members exactly like any other loan agreement — the personal relationship of the parties does not weaken enforceability. If the borrower does not repay, the lender can file a civil suit for recovery of money on the strength of the signed document. Bangladesh's statute of limitations for a money-recovery suit is short (a fixed number of years from the date the loan became due), so confirm the current limitation period with a lawyer before delaying — waiting too long will bar the recovery entirely.

Should I take my brother's / friend's money-lending to court if it fails?

That is your judgment call, but the written agreement gives you options either way. Many family-loan disputes are resolved by first attempting reconciliation, then a formal legal notice, and only then filing suit. Having the signed agreement in hand strengthens each stage — a good legal notice with attached agreement is often enough to prompt repayment without a court process.