Saya & Associates
Recovering a personal loan in India without a written agreement
A friend borrowed money and stopped answering
You transferred money to a friend for a medical bill, on a promise to repay "in a few months". Two years later, the messages have slowed and nothing has been repaid. Nothing was signed. This example is hypothetical.
This guide covers informal lending between individuals. Bank loans, secured lending and money-lending as a business need their own advice.
No written agreement is not the end of the claim
Section 10 of the Indian Contract Act says agreements are contracts if made by free consent of competent parties, for lawful consideration and a lawful object.
It preserves any law requiring a particular contract to be in writing, witnessed or registered.
No such rule applies to an ordinary personal loan. The missing document makes proof harder, but it does not make the loan unenforceable.
Was it a loan?
Start with what the parties actually intended. A transfer may have been a loan, a gift, a shared expense, an investment or an advance for something else, and an informal arrangement is exactly where that gets disputed.
Do not describe an investment loss as an unpaid loan. Equally, do not assume a transfer to a relative was a gift just because the relationship was close. The messages and surrounding facts decide it.
The limitation clock starts when you lend
| Type of loan | Limitation Act, Schedule | Period | Time runs from |
|---|---|---|---|
| Money lent | Article 19 | Three years | When the loan is made |
| Money lent where the lender gave a cheque | Article 20 | Three years | When the cheque is paid |
| Money lent, payable on demand | Article 21 | Three years | When the loan is made |
A loan "payable on demand" still runs from the date of the loan, not the date you demand it. A loan with a fixed repayment date may fall under a different article, so check the agreed terms.
A fresh period can start from a written acknowledgment of the debt signed by the borrower before the period expires (section 18), or a part-payment made before expiry and acknowledged in writing (section 19).
See our guide to limitation for money recovery.
Your own legal notice or reminder does not restart the clock.
Build a chronology of the loan
Write down when the money was requested, what was said about its purpose and repayment, when each amount was transferred, and what happened afterwards. List each transfer separately rather than one unexplained total.
If the money went to someone else at the borrower's request, such as a hospital or a supplier, record who asked for that and why.
For cash, record what evidence exists of the payment and its purpose. Never create a backdated receipt or ask anyone to sign a statement that is not true.
Large cash loans can also raise income-tax questions, so tell your lawyer how the money was actually paid.
Preserve the evidence of repayment
Useful material includes the request for money, bank or UPI records, messages discussing repayment, emails confirming a balance, and records of anything already repaid.
Keep complete message threads, not cropped screenshots that lose the context around a promise. See our guide to WhatsApp evidence for how to preserve chats.
Witnesses can help if they actually heard the conversation. Do not ask anyone to adopt an account they did not hear, and do not access the borrower's devices or accounts.
Work out what is owed
| Item | What to record |
|---|---|
| Money advanced | Date, amount, recipient and supporting record |
| Repayments | Date, amount and how each was allocated |
| Principal balance | Advances less repayments towards principal |
| Interest claimed | The basis for it and any agreed rate |
| Disputed items | The specific amount or transfer in dispute |
Keep principal, any agreed interest and any settlement discount separate. Do not add an arbitrary penalty for the delay. If the borrower disputes the total, identify the exact difference.
Decide what the next step is for
If repayment is still realistic, a written settlement may work. It should state the admitted balance, the payment dates, what happens on a missed payment and when any release takes effect.
If the borrower denies the loan or stops responding, the forum, the procedure and the practical chance of collecting the money all need assessment.
Winning a decree and recovering the money are separate stages; see our guide to executing a money decree.
Preparing to recover an informal loan
- Find the date of each loan. List every transfer with its date, amount and how it was paid.
- Check the limitation date. Count three years from the date of each loan, and note any signed acknowledgment or part-payment.
- Collect the proof of the loan. Gather the requests, messages and emails that show the money was lent and was to be repaid.
- Prepare the ledger. Set out advances, repayments, the principal balance and any interest claimed.
- Record the borrower's details. Note the borrower's full name, address and any other identifying details.
- Take advice before the deadline. Decide between settlement, a notice and a suit while there is still time to file.
Frequently asked questions
Can I recover money lent to a friend without a signed agreement?
Yes, if you can prove it was a loan and you sue within time. An ordinary personal loan does not need to be in writing, but you must show the money was lent and was to be repaid.
How long do I have to sue for money lent in India?
Usually three years from the date the loan was made, under Article 19 of the Limitation Act. Even for a loan payable on demand, Article 21 counts the three years from the date of the loan.
Is a bank transfer enough to prove a loan?
It proves money moved more easily than why. Keep the messages and other records that explain the purpose of the payment and what was agreed about repayment.
Does sending a legal notice restart limitation?
No. A fresh period starts only from the borrower's signed written acknowledgment, or a part-payment acknowledged in writing, made before the period expires. Your own notice does neither.
Does a WhatsApp message promising to repay help?
It can be evidence that the money was a loan. Whether it also counts as a signed acknowledgment that restarts limitation under section 18 needs advice on the message and the facts.
The takeaway
Write down the date of every loan today and count three years from each. Then gather the messages that show it was a loan, and take advice while there is still time to file.
To discuss recovering a loan, contact Saya & Associates with the transfer dates, the amounts and the key messages.
This article provides general information on Indian contract and limitation law as at 4 November 2026. The applicable period, proof and remedy depend on the terms and facts of the loan. It is not legal advice.