Transfer of money to relative

An assessee has lended Rs 1000000 to someone on which he is getting interest @ 12% p.a.

Now he (assessee) transfers this 1000000 to his wife by way of cheque without any consideration. And his wife will receive interest income from third party.

So now onwards, interest income will be shown in his wife's return.

Whether this transaction is allowable?

Whether the assessee has to make any gift deed for such transfer?