PayPal Suspending Direct Deposits/Electronic Withdrawals in India

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.

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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.

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Keith Dsouza

I am the editor-in-chief and owner of Techie Buzz. I love coding and have contributed to several open source projects in the past. You can know more about me and my projects by visiting my Personal Website.I am also a social networking enthusiast and can be found active on twitter, you can follow Keith on twitter @keithdsouza. You can click on my name to visit my Google+ profile.

  • Just read their mail .. 5-6 days only for preparing the cheque ..then how many days to ship it .

  • Really sad news for the paypal users.

    On one side our country is moving ahead in technology, and on the other RBI is trying to move backwards.

    The reason why they have stopped is that “The RBI is concerned that PayPal operates as an unregistered money transfer company in India.”

    Paypal has been operating in India since 3-4 years and RBI woke up now and say its not registered ?? Really ridiculous.

    • Mannu

      This is because paypal is not paying any tax and their is no track of money from it !! And every one wake up only after things go bigger …no one cares about a small fish in a ocean . I think this issue is more with paypal then Indian bank as they are not surely fufilling their norms ….this was all my opinion one knows what is going beond the scene..lets hopr for the best !! thanks!!

  • Gopi

    If Govt. of India CLERKS have their way – very soon Cheque too will be banned and only BARTER of Food Grains, Clothes will be allowed – cash too will be banned.

    Back to 12th Century.

    Electronic Transfer – IS MUCH BETTER – easier to Track.
    Why Cheques?

  • but now for cheque we need not to pay $5 extra
    dey will refund the $5 :) :)

  • A new fact about Pay Pal :

    I applied for a charity account with Pay pal because its free and supported by vbulletin software for payment subscription, I have all the documents like NGO Registration certificate, Memorandum of Society, Society PAN card, and the Bank details , bank details were verified by the Pay Pal by depositing amount of Rs. 2 and 40 paisa, after submitting all the document as per said in their website and in their emails, they denied me for the account, just because they have no tie-up with India regarding charity account, what the hell is this, why the pay pal people should not mention at the time sign up process. I have wasted around 1000/- rs in doing fax to pay pal and after 4-5 days they denied.
    Don't apply for a charity account with pay pal if you are living in India. Just wastage of time and money.

  • Very much align with Sonia, PayPal is doing monopoly here, transaction fee while transfer amount to your bank……Huge.

    No other option available here…. ccavenue is too expensive.