If Aadhaar is not mandatory and the customer does not want a LPG cylinder at the subsidised rate, then why did this distributor of Bharat Gas in Hyderabad block his name?
A consumer is entitled to receive nine liquefied petroleum gas (LPG) cylinders per family per year under the subsidised quota. After this rule came into force, one would have thought that at least the consumer would easily get his cooking gas cylinder. Unfortunately, the United Progressive Alliance (UPA) government has different plans. It has launched an ambitious direct cash transfer scheme to dole out subsidy directly into user's bank account. Only hitch was this account must be linked through an Aadhaar number. What everybody forgot was even today, the Unique Identification Authority of India (UIDAI), the body responsible for the Aadhaar numbering scheme, says that its UID is not mandatory.
The UPA government is trying to link Aadhaar-enabled service delivery to various government schemes such as MNREGA wage payments, PDS distribution, payment of social security benefits like as old-age payments and distribution of LPG cylinders. This is being done without taking stock of the ground level infrastructure and practical difficulties.
Here is a glaring case of a Moneylife reader, who was denied a LPG cylinder despite showing readiness to buy it at the market rate. Strangely, the LPG distributor blocked his connection for not providing Aadhaar number. Here is the first person account of the reader...
“I have two LPG connections—one in my name and the other in my wife’s name. Both the connections for single cylinder each are from Bharat Gas and from the same distributor in Hyderabad.
Some time back when the government announced plans to eliminate duplicate gas connections, I approached my distributor asking what to do. He asked me not to worry now and approach him in case there was a problem. At that time, nothing happened. I was able to subscribe to LPG—however, I used only my connection.
Later on in January-February 2013, it was announced that Aadhaar would be required to avail the subsidy. Having read the articles on UIDAI and Aadhaar in Moneylife, I decided not to apply for the Aadhaar number and was ready to buy LPG without subsidy. However, I never needed to buy a cylinder then.
In April 2013, I shifted my residence. For this, I had to approach the distributor to change my delivery address. I was informed that my connection was blocked due to duplicate connections. The distributor asked me to visit him again after a few days. I visited him later but was informed that the connection was blocked again. I had to visit his office thrice.
Finally the fourth time, when I visited his office, there was a new person. He informed me that I needed the Aadhaar number to unblock my connection. I said that I had come earlier and was never told so. He still asked for an Aadhaar number. I said that Aadhaar is required to get the gas cylinder at subsidised rate. And since I do not have Aadhaar number, you can charge me the non-subsidized price and provide me a gas cylinder. He replied saying since these are the rules, I had to provide the Aadhaar number else I would not get the LPG cylinder.
I told him that according to rules, when there is a duplicate connection KYC should be done and two single connections should be converted to a double connection on the same address. He was still adamant about Aadhaar number. I asked for the address for the consumer service cell. He pointed me to a board (bit far away—inside the office). When I went closer to have a look he asked me to read it from outside saying that I was not a VIP (to enter inside). I said that it was not clear—how can I read? (On 25 October 2012, the petroleum ministry decided to allow multiple connections and introduced one more price category called non-subsidized non-domestic exempt-NDEC, which is about three times the subsidized residential price.)
I tried to locate the consumer service cell but could not find it. Looks like I visited the wrong street. I had to visit it again. I then lodged complaint in Public Grievance Forum and BPCL's Feedback page (sadly it accepts only 500 characters on the complaint page). I tried to call the toll free oil companies number—1800 233 3555. There I was informed that Aadhaar number was required in Andhra Pradesh for availing a LPG cylinder while in other states it is required to avail the subsidy on LPG cylinder. I tried to reason with him that Aadhaar is required only for subsidy and nowhere I have read about it is being required to avail LPG cylinder. But that was not helpful.
To my knowledge, Aadhaar is required only to avail the subsidy. In either case consumer has to pay the full amount. If the consumer has a Aadhaar number, then subsidy is directly credited to his linked bank account. This does not mean that consumer cannot buy LPG cylinders or change his address.
I do not want to apply for an Aadhaar card. I will try visiting the consumer service cell again and see what response I get.
Here is the update:
I approached the customer service centre on Saturday and they have helped me out in availing LPG without an Aadhaar number. The only downside is that I cannot avail the subsidy. I am OK with it as my LPG consumption is rather less.
Once I visited the office, I spoke to the sales manager for the region. He then spoke to the distributor asking him to allow me to change my address and convert my two single connections into a single connection with two cylinders.
However, based on my experience with the distributors the following still needs to be improved on:
1. For new connections, it is mandatory to buy gas stoves or other things from the distributor. In addition, these are priced exorbitantly. I have had issues with my distributor which were resolved after intervention of Bharat Petroleum.
2. Though much is being said about LPG portability, I cannot see how this will help. For any oil marketing company (OMC) there is only one distributor in a given region. Thus if one wants to port, he will have to switch to another OMC's distributor in the same region. I wonder how will this benefit the consumer as the service quality is same, prices are same, goondaism of the distributors is also the same.
You may also want to read…
Never-ending woes of LPG consumers
Is Aadhaar being used as a political tool by the UPA government?
LPG quota: Mockery of subsidy reduction efforts or unadulterated politics?
Total jewellery demand rose 15% to 159.5 tonnes from 138.3 tonnes, while investment demand increased by 52% to 97 tonnes from 63.8 tonnes, WGC said
Gold demand in India, the world’s largest consumer, rose 27% to 256.50 tonnes in the first quarter of the calendar year 2013, according to data from the World Gold Council (WGC).
Demand for the precious metal stood at 202.1 tonnes during the same quarter last year, it said.
“Gold demand in India for both jewellery and investment continues to remain strong. Price fluctuations in gold recently have only served to reinforce Indian consumers’ appetite for purchasing physical gold,” WGC India managing director Somasundaram PR told reporters.
He said gold is a time-tested asset class which has helped preserve the wealth of Indian families for generations.
“With the ongoing wedding and festive season, we believe that demand for gold will continue to remain robust,” he said.
In terms of value, WGC said in its latest report that gold demand in India during January-March period of this year increased by 32% to Rs72,899.4 crore against Rs55,148.7 crore in the year-ago period.
Total jewellery demand rose 15% to 159.5 tonnes from 138.3 tonnes, while investment demand increased by 52% to 97 tonnes from 63.8 tonnes.
About 21 tonnes of gold was recycled during the quarter under review against 25 tonnes in the same quarter last year, the report said.
Global demand fell 13% to 963 tonnes as strong growth in consumer demand for gold jewellery, bars and coins was exceeded by substantial net outflows from gold ETFs, it said.
A federal law is supposed to protect service members from predatory lending. But lenders exploit loopholes, trapping military personnel in high-interest debt
This story was co-produced with Marketplace. Listen to their coverage.
Seven years after Congress banned payday-loan companies from charging exorbitant interest rates to service members, many of the US's military bases are surrounded by storefront lenders who charge high annual percentage rates, sometimes exceeding 400 percent.
The Military Lending Act sought to protect service members and their families from predatory loans. But in practice, the law has defined the types of covered loans so narrowly that it's been all too easy for lenders to circumvent it.
"We have to revisit this," said Sen. Dick Durbin, D-Ill., who chairs the defense appropriations subcommittee and is the Senate's second-ranking Democrat. "If we're serious about protecting military families from exploitation, this law has to be a lot tighter."
Members of the military can lose their security clearances for falling into debt. As a result, experts say, service members often avoid taking financial problems to their superior officers and instead resort to high-cost loans they do not fully understand.
The Department of Defense, which defines which loans the Military Lending Act covers, has begun a process to review the law, said Marcus Beauregard, chief of the Pentagon's state liaison office.
The act mainly targets two products: payday loans, usually two-week loans with annual percentage rates often above 400 percent, and auto-title loans, typically one-month loans with rates above 100 percent and secured by the borrower's vehicle. The law caps all covered loans at a 36 percent annual rate.
That limit "did do a great deal of good on the products that it covered," Holly Petraeus, the Consumer Financial Protection Bureau's head of service member affairs, said in an interview. "But there are a lot of products that it doesn't cover."
Representatives from payday and other high-cost lenders said they follow the law. Some defended the proliferation of new products as helpful to consumers.
A 400 Percent Loan
In June 2011, when Levon Tyler, a 37-year-old staff sergeant in the Marines, walked into Smart Choice Title Loans in Columbia, S.C., it was the first time he would ever gone to such a place, he said. But his bills were mounting. He needed cash right away.
Smart Choice agreed to lend him $1,600. In return, Tyler handed over the title to his 1998 Ford SUV and a copy of his keys. Tyler recalled the saleswoman telling him he'd probably be able to pay off the loan in a year. He said he did not scrutinize the contract he signed that day.
If he had, Tyler would have seen that in exchange for that $1,600, he had agreed to pay a total of $17,228 over two and a half years. The loan's annual percentage rate, which includes interest and fees, was 400 percent.
Tyler said he provided his military ID when he got the loan. But even with an annual rate as high as a typical payday loan, the Military Lending Act didn't apply. The law limits the interest rate of title loans — but only those that have a term of six months or less.
In South Carolina, almost no loans fit that definition, said Sue Berkowitz, director of the non-profit South Carolina Appleseed Legal Justice Center. The reason? Ten years ago, the state legislature passed consumer protections for short-term auto-title loans. In response, lenders simply lengthened the duration of their loans.
Today, plenty of payday and auto-title lenders cluster near Fort Jackson, an army base in Columbia, legally peddling high-cost loans to the more than 36,000 soldiers who receive basic training there each year.
Tyler's loan showcases other examples of lenders' ingenuity. Attached to his contract was an addendum that offered a "Summer Fun Program Payoff." While the loan's official term was 32 months, putting it outside both South Carolina's regulations and the Military Lending Act, the "Summer Fun" option allowed Tyler to pay off the loan in a single month. If he did so, he would pay an annual rate of 110 percent, the addendum said.
Michael Agostinelli, the chief executive of Smart Choice's parent company, American Life Enterprises, told ProPublica he wants his customers to pay off their loans early. "They're meant to be short-term loans," he said. He also said that customers who pay on time get "a big discount." In Tyler's case, he would have paid an annual rate of 192 percent if he had made all his payments on time.
But Tyler fell behind after only a couple of payments. Less than five months after he took out the loan, a repo company came in the middle of the night to take his car. Three weeks later, it was sold at auction.
"This was something new, and I will never do it again," Tyler said. "I don't care what type of spot I get in."
American Life Enterprises companies operate nine title-lending branches in Nevada and South Carolina. Agostinelli said loans to members of the military are rare for his companies but that service members might go to a title lender for the same reason anybody else does: They need money immediately and discreetly.
Loans similar to the one Tyler took out are broadly and legally available from stores and over the Internet. QC Holdings, Advance America, Cash America and Ace Cash Express — all among the country's largest payday lenders — offer loans that fall outside the definitions of the Military Lending Act, which defined a payday loan as lasting three months or less.
The annual rates can be sky high, such as those offered by Ace Cash Express in Texas, where a five-month loan for $400 comes with an annual rate of 585 percent, according to the company's website.
Ace Cash is among a number of payday lenders just outside the gates of Lackland Air Force Base in San Antonio, and it has four stores within three miles of Fort Hood in Texas.
A 2012 report on the Military Lending Act by the Consumer Federation of America found there had been no drop in the number of payday lenders around Fort Hood since the 2006 law went into effect.
Amy Cantu of the Community Financial Services Association of America, which represents the payday industry, said payday lenders are careful to screen out service members for their short-term products. But she acknowledged that payday companies may provide soldiers and their families with other types of loans. "We welcome more products in the market," she said of the trend of payday lenders increasingly offering longer-term loans. "Options are good for consumers."
Earned a Purple Heart, Lost a Car
Some lenders apparently have not bothered to change their loan products in response to the law.
A 2011 federal class-action suit filed in Georgia's Middle District alleges that one of the largest auto-title lenders in the country, Community Loans of America, has been flouting the law. The suit names among its plaintiffs three soldiers who took out what appeared to be classic title loans. All agreed to pay an annual rate of around 150 percent for a 30-day loan. All had trouble repaying, according to the suit. One, an Army staff sergeant and Purple Heart recipient, lost his car. The other two managed to pay interest but almost none of the principal on their loans for several months.
The company was fully aware that its customers were soldiers, because they presented their military identifications, said Roy Barnes, a former governor of Georgia who is representing the plaintiffs.
Community Loans, which boasts more than 900 locations nationwide, argued in court that the transactions were not covered by the Military Lending Act because they weren't loans but sales. Here's how Community Loans said the transaction worked: The soldiers sold their vehicles to the company while retaining the option to buy back the cars — for a higher price. In early 2012, the judge rejected that argument. The case is on-going.
Community Loans, which did not respond to numerous calls and emails, has been making loans to service members through businesses with various names.
Leading up to the gates of Fort Benning in Columbus, Ga., Victory Drive is crowded with lenders. Among them is Georgia Auto Pawn, a Community Loans of America storefront where one of the plaintiffs in the class action, an Army master sergeant, took out his loan.
Just another half-mile down the road is a lender advertising "Signature Loans for the Military." The lender goes by the name of Title Credit Finance, but the parent company is Community Finance and Loans, which shares the same corporate address as Community Loans of America.
A billboard for Title Credit Finance promises to rescue borrowers: Showing a picture of a hamster on a wheel, it says, "Avoid the title pawn treadmill," referring to customers who get caught paying only interest month after month.
Title Credit Finance offers installment loans, a product which, as the company advertises, does seem to provide "CASH NOW The Smart Way" — at least when compared to a title loan. Interest rates tend to be lower — though still typically well above 36 percent. And instead of simply paying interest month upon month, the borrower pays down the loan's principal over time.
But the product comes with traps of its own. Installment lenders often load the loans with insurance products that can double the cost, and the companies thrive by persuading borrowers to use the product like a credit card. Customers can refinance the loan after only a few payments and borrow a little more. But those extra dollars typically come at a far higher cost than the annual rate listed on the contract.
At TitleMax, a title-lender with more than 700 stores in 12 states, soldiers who inquire about a title loan are directed to InstaLoan, TitleMax's sister company, which provides installment loans, said Suzanne Donovan of the nonprofit Step Up Savannah. A $2,475 installment loan made to a soldier at Fort Stewart near Savannah, Ga., in 2011 and reviewed by ProPublica, for example, carried a 43 percent annual rate over 14 months — but that rate effectively soared to 80 percent when the insurance products were included. To get the loan, the soldier surrendered the title to his car. TMX Finance, the parent company of both TitleMax and InstaLoan, did not respond to multiple calls and emails seeking comment.
Another lender on Victory Drive is the publicly traded World Finance, one of the country's largest installment lenders, with a market capitalization of about $1 billion and more than 1,000 stores around the country. World was the subject of an investigation by ProPublica and Marketplace earlier this week. Of World's loans, about 5 percent, approximately 40,000 loans, are made to service members or their families, according to the company. Active-duty military personnel and their dependents comprise less than 1 percent of the U.S. population, according to the Defense Department.
Bill Himpler, the executive vice president of the American Financial Services Association, which represents installment lenders, said the industry's products had been rightfully excluded from the Military Lending Act. The Pentagon had done a good job preserving soldiers' access to affordable credit, he said, and only "tweaking the regulations here or there to tighten them up" was necessary.
The Commander and the Collectors
It's not known how many service members have high-priced loans. The Pentagon says it intends to conduct a survey on the matter soon and issue a report by the end of the year.
But some commanders, such as Capt. Brandon Archuleta, say that dealing with soldiers' financial problems is simply part of being an officer. Archuleta, who has commanded soldiers in Iraq and Afghanistan, recalled fielding numerous calls from lenders trying to track down soldiers who were delinquent on debts.
"In the last 12 years we've seen military officers as war fighters, we've seen them as diplomats, we've seen them as scholars," Archuleta said. "But what we don't see is the officer as social worker, financial adviser and personal caregiver."
While some soldiers seek help from their superior officers, many do not. That is because debt troubles can result in soldiers losing their security clearance.
"Instead of trying to negotiate this with their command structure, the service member will typically end up refinancing," said Michael Hayden, director of government relations for the Military Officers Association of America and a retired Air Force colonel. "It'll typically start out with some type of small crisis. And then the real crisis is just how you get that loan paid off."
Soldiers who hide their debt often forego the military's special aid options. Army Emergency Relief and the Navy-Marine Corps Relief Society offer zero-interest loans. But in seeking that help, a soldier risks alerting the commanding officer to his or her troubles, particularly if the sum needed is a large one.
Russell Putnam, a legal-assistance attorney at Fort Stewart, says he often finds himself making a simple argument to soldiers: "A zero percent loan sure as heck beats a 36 percent plus or a 25 percent plus loan."