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Promissory Note Template
A pro-note is a written promise to pay a specified sum on demand or by a fixed date. Stamp it as per state schedule (usually ₹1 per ₹1,000) — required to be admissible in court.
PROMISSORY NOTE
Place: Gurgaon
Date: 2026-05-17
For value received, I, Ramesh Kumar, son/daughter of __________________,
resident of 12, Sector 14, Gurgaon, do hereby promise to pay to Suresh Kumar,
resident of 14, Sector 22, Noida, or order on demand the sum of
₹200000 (Rupees Two Lakh only) together with interest thereon at the
rate of 12% per annum from the date hereof until repayment.
The principal amount shall be repaid on or before 2027-05-04 and
the interest accrued thereon shall be paid along with the principal.
In default of payment of any instalment of interest or the principal
on the due date, the entire balance with interest shall become payable
forthwith.
Ramesh Kumar
(Borrower)
Witness 1: ____________________ Signature: ____________________
Witness 2: ____________________ Signature: ____________________How it works
A promissory note (or “pro-note”) is defined under section 4 of the Negotiable Instruments Act, 1881 as an instrument in writing containing an unconditional undertaking, signed by the maker, to pay a certain sum of money to or to the order of a specified person. To be enforceable, it must be on a stamp paper as per the relevant state schedule — typically ₹1 per ₹1,000 in most states — and the limitation period to sue is 3 years from the date of execution or last acknowledgement under Article 35 of the Limitation Act.
Worked example
Rahul lends his cousin Priya ₹2,00,000 in Pune at 9% simple interest per annum, repayable in 12 equal monthly instalments. The pro-note carries ₹200 in non-judicial e-stamp, is signed by Priya before two witnesses on 1 May 2026, and lists EMI ₹17,500 due on the 1st of each month. If Priya defaults, Rahul can file a summary suit under Order XXXVII CPC up to 1 May 2029 (limitation), and a cheque-bounce case under section 138 NI Act if she pays via cheque.
When to use this
- Friends-and-family loans, where verbal promises are unenforceable
- Trade advances between vendor and small business (interest-free or interest-bearing)
- Loan against gold or post-dated cheques from a private lender
- Bridge financing from an angel investor before formal SAFE/CCD docs are signed
For larger personal loans against property or assets, consider drafting a sale deed for asset transfer instead, and use the EMI calculator to set instalment math.
FAQ
Is a promissory note legally enforceable?
Yes, under the Negotiable Instruments Act 1881. Stamp it (₹1 per ₹1,000 typical, state-specific) and sign — it's admissible in court for recovery suits. Without proper stamping, it has limited evidentiary value.
How is a promissory note different from a loan agreement?
Pro-note is a unilateral promise to pay, simpler. Loan agreement is bilateral with detailed terms (collateral, default clauses, jurisdiction). For small personal loans < ₹5L, pro-note suffices; larger amounts use a loan agreement.
Within how many years can I sue on a promissory note?
3 years from the date payment was due (Limitation Act, Article 35). Beyond that, legally barred — though you can still attempt informal recovery.