Loan to an individual or firm

Hi All,

if someone is a salaried employee with good amount savings every month and from that savings he is giving interest free unsecured loan to his friends/relatives and proprietership firms but parallel to that he is also taking home loan from SBI on interest.  

Is this acceptable to Income tax department ? On one hand he is lending his money to someone without interest and on other hand he is raising loan from bank. 

Let me know.

Regards,

Divya