After suspending personal payments in India, making PAN Cards compulsory and putting a lot of Indian website owners and others at hassle, PayPal is now going to stop Electronic Withdrawals or Direct Deposits in India.
PayPal India has just sent out a notice to all their users stating that Electronic or Direct Deposits to banks in India will no longer be available after July 29, 2010 for an indefinite period. Once again this is because of problems it is having with the Central banking authority in India also known as Reserve Bank of India.
The official note from PayPal to Indian users says this:
In accordance with regulatory instructions, we would like to notify you about a change in our withdrawal functionality in India starting on August 1, 2010. At present you can request for either an electronic or cheque withdrawal of funds from your PayPal account if you are an India user.
From July 29, 2010 onwards, you will only be able to request for a cheque withdrawal of funds from your PayPal account.
While we are working hard to restore the electronic withdrawal service, in the meantime, we are bringing this matter to your attention so that you can plan your future withdrawal activities accordingly.
Though there is no note on why the Direct Deposits are being stopped or when they will resume, it is more likely that the Indian Government is cracking on the free flow of money to India through PayPal. However, what beats me is the they can easily track the transactions even if they are direct deposits, so why put everyone through an hassle with a cheque?
The one silver lining in this entire news is that PayPal will refund the $5 fee which users have had to be paid if they were using a cheque withdrawal.