Paypal has again stopped transferring funds via Electronic Funds Transfer to Banks in India. However cheque withdrawal is allowed. Got this Email from Paypal
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.
In order to help you with this change and until further notice, we will refund the $5 USD cheque withdrawal fee to you for cheque withdrawals made on July 29, 2010 onwards.
So Paypal has again implemented this step by saying “in accordance with regulatory instructions”.
The good news is that we will not be charged this $5 charges for Cheque withdrawal. I strongly feel that Government of India or RBI must solve this problem once and for all. I hope Paypal improves its service in near future. Nowadays Paypal has not remained as the hassle free service, but it has hassles, especially if you are in India. Lets hope the problem gets solved soon.