PayPal Stops Electronic Fund Transfer to India Banks

PayPal has stopped electronic bank withdrawals to customers in India and seems part of the continuing problems with Reserve Bank of India and international money transfer guidelines across India.

PayPal has announced that

In accordance with regulatory instructions, there will be 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. From July 29, 2010 onwards, you will only be able to request for a cheque withdrawal of funds from your PayPal account.

Paypal had earlier blocked personal payments to India as per RBI orders, then later restored payments but only for settlements for exports of goods and services, and that too with requirement of an purpose code.

While Paypal is working on restoring fund transfers to India, the cheque withdrawal is the only option available for the thousands of freelancers using the Paypal as a convenient payment option. Paypal has setup a page for Paypal India users on how they can request a cheque to cash out their funds.

To pacify the users, Paypal has also decided to refund the US$5 cheque withdrawal fee for cheque withdrawals made on July 29, 2010 onwards. I am sure lot of PayPal users will be disappointed as cheque withdrawal and bank deposit takes a long time for money transfer…

UPDATE (30/7): Paypal has restarted electronic withdrawals to India banks. To thank you for your loyalty, they will still provide the US$5 processing fee refund for any cheque withdrawals made from July 29 until further notice.


  1. Nandan says:

    Very disappointed. anyway thank you for the article.

  2. Harsh Agrawal says:

    Though they giving a refund of 5$ for every cheque request but still it’s a problem for many Bloggers, freelancers and onliine marketers based in India. Because such cheque will take atleast 5-7 days to reach you + another couple of weeks for clearance.. Hope this issue will get resolved soon…

  3. QuickOnlineTips says:

    And dont forget you can withdraw $2500 max per month by cheque. At least they should lift the limit till the issue is sorted for India Paypal users.

  4. Parikshit says:

    Really disappointing. Now we dont have any other option but to wait for further notice from Paypal.

    The issue I am concerned about is that Paypal sends the cheques through regular mail, which works at snail’s speed in India. More concern about the mail being lost !

    I think Paypal should let Indian users let us transfer our funds to Xoom for the time being, which also transfers international currency earned to bank accounts in India.

  5. H-DEE says:

    Paypal is such a crap system to withdraw amount through cheques.


    1. Min withdrawl amount in USD is $150.

    2. Even if you enter 6-digit PIN CODE for Billing Code, it won’t accept it and comes up with a disgusted error “Please enter 6-digit PIN CODE e.g. 123456″. How crap system is that? Can’t it even count how much 6-digits are?

    3. It says no address field should be more than 33 to 35 characters long. Ok fine! But, when you select a state from a dropdown menu, in my case its “National Capital Territory of Delhi”. What a blunder? It do not gives other choice for delhities and if we select that option, it comes up with its more than 33 characters error. I think every people in Delhi or states having name more than 33 characters or so are facing this problem.

    Just hope it resolves this, or if you may suggesst anything better than paypal?

  6. QuickOnlineTips says:

    I had the same problem that the drop down “National Capital Territory of Delhi” is too long. They should shorten it to Delhi, so that it fits the 35 characters.

    • H-DEE says:

      I sent them email regarding the same but just didn’t answered what exactly was asked. So I resent the email with Image snapshot this time in case they have idiots on their side replying to our mails.

      Why don’t you try and send them e-mail too. Flooding with lots of email of same kind might make them think about the real problem.

  7. Sonia says:


    I applied for a charity account with Pay pal, and after submitting all the document as per said, they denied me for the account, just because they no tie-up with India regarding charity account, what the hell is this, why the pay pal people should 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.

  8. Sarbjit Singh says:

    According to the update on PayPal’s website the Electronic Transfers have been restore.


    • Roshan Ahmed says:

      Yeah, I’ve got the mail today about the restoration. But it’s more!! They’ve also said the the refund of the cheque fee (which is $5) will be continued until further notice.

  9. Motorola Xoom Review says:

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  10. Shirginda says:

    Thanks for your facts, are actually looking quite a few nights just for this.

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