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Micro-finance can be a vital financial concept for empowerment
of India’s masses who are extremely poor, and semi-literate.
And when IT is added to this financial concept, it can result
in great things. Frederick Noronha profiles Hisaab,
one tool that aims to do exactly that.
 He
has been spending time in India even as we start seeing signs
of a reverse brain-drain with skills and talent showing up
from among expatriates keen not just on understanding their
roots, but working to improve things here.
Tapan Parikh (27) says his parents migrated from Baroda
in 1972, and he was born in Queens, NY, and grew up “around
New York City”. After graduating in molecular modelling,
he got his Masters’ in Computer Science and is currently
a student in the PhD programme at the University of Washington.
Since 2000 he has been working in India in diverse ventures.
Micro-finance, an attempt to get the poor to help themselves
by collecting small sums of money and loaning it between themselves,
is all set to get a leg-up from IT if Parikh and his team
have their way.
Their new software is in its final stages of readiness to
make it easy for simple villagers to undertake complex financial
transactions. It’s called Hisaab (accounts).
What’s unique about Hisaab is that it not only makes
the account-keeping process simpler, but also ensures that
people with low-literacy skills can use this new package.
“This software has a different kind of user-interface.
It has been designed with low-literacy groups in mind,”
explains Parikh. Instead of names and text, it has more numbers
involved. It’s obvious, but we often forget that it’s
easier for the semi-literate to read numbers.
“Users could replace someone’s name with a code-number.
Numbers are also easier to remember,” says Parikh. It’s
easier to type in a number too.
How the software works seems simple enough, at least in
theory: Each month, a group of women meet and puts together
Rs 50, 70 or 100, or some other predetermined figure.
Over time, this generates into a corpus of money that can
be used for income generation, tackling sickness, or the loss
of a job. Because the group works collectively in saving and
loaning out their resources, repayments tend to be high due
to peer pressure against defaulting.
“Money is put back, and over time, it grows. This allows
larger loans to be taken. The core-goal is to rotate money
as much as possible, so it supports productive activity. So,
a rupee put in gets used not two or three times in a year,
but revolves around 10-11 times if possible,” says Parikh.
He says such groups expect to link up with banks and NGOs
who are working on micro-finance, and NABARD (the Indian bank
for agriculture and rural development), which also offers
loans to such self-help groups.
“Due to their collective liability, they have shown
better repayment rates. If one person doesn’t pay, everyone
would be less likely to get a loan. Repayment rates are as
high as 90-95 percent while individual repayments elsewhere
could be 40 percent,” argues Parikh.
“This is not just theory. It works in practice too.
It depends on how strong the groups are, and how well managed.
You need to build capacity in accounting, management and discipline,”
says he.
To make the software user-friendly for the semi-literate,
it’s being built up textually-light, with a greater number
of images and graphics. Currently, it is being built up by
teams at Media Labs Asia and Human Factors International.
HFI is a Fairfield, Iowa headquartered group, which says,
“We make software usable.” It has its India office
in Mumbai.
Recently, the team putting together this software went and
gave a demo to potential users in Tamil Nadu. In Madurai,
the team met with CCD (Covenant Centre for Development), which
is led by N Muthu Velayutham. Feedback was positive.
Its demo version has been done in Flash, while actual development
would be done in Java meaning that the software could be run
either on the widely used Windows platform, or the increasingly
popular GNU/Linux operating system.
“We want this to be an empowering tool (for the villager
and micro-credit groups). By being able to manage their own
finances in a more sophisticated way, they will now be able
to undertake more complex transactions,” says Parikh.
For instance, withdrawals and deposits could be more arbitrary
and need-based than would otherwise be possible in a more
traditional form of accounting. You don’t have to save
fixed sums of money just because it makes accounting easier.
“Complex financial transactions are possible without
accounting hassles,” says Parikh.
Bangladesh’s Grameen Bank is perhaps the best known
model of micro-finance in the Third World. That has come in
for some criticism though. “Perhaps over time it has
got centralised and institutionalised. But we want to ensure
that contact remains with the local people, and to focus on
minimum external intervention,” says Parikh.
“We are still working on some of the research issues
in the UI design. But we are still at an early stage,”
cautions Parikh. This demo interface design is primarily the
work of Kaushik Ghosh, an interface designer from the prestigious
National Institute of Design, who works at Media Labs Asia.
Incidentally, Media Labs Asia (MLA) is a network of R&D
institutions. To bring the “benefits of new technologies
to everyone”, it is trying to build partnerships with
research institutions, industry and NGOs.
Media Labs Asia has been set-up as a non-profit organisation
with seed-funding from the government of India. It has been
appointed by the United Nations as its academic and industrial
body for the region in the newly created UN ICT Task Force.
Headquartered in Mumbai (see www.medialabasia.org), it has
research laboratories created on the campuses of the IITs
at Mumbai, Chennai, Delhi, Kanpur and Kharakpur.
Those on the team which have been working on this project
are Kaushik Ghosh and Tapan Parikh of Media Lab Asia; and
Puneet Syal, Sarit Arora, Abhijeet Thosar and Apala Chavan
of Human Factors International, Mumbai.
Tapan Parikh can be contacted at tapan@media.mit.edu. Check
out more details about Hisaab at http://hisaab.sourceforge.net
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