How to lend money, what are the documents you should when you lend money?

One of my relative is in a big financial mess and it has become my responsibility to help him in this. I would like to make an agreement for the money lent. I have heard that you should take signature in a blank bond paper and take 3 cheques/ checks with the borrowers sign on it.

Is this valid, can some one help me in this?
The family system here in India emphasizes a lot on relationship and values, the person is from close family, so I am sucked in to this.