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Paypal India Issue resolved but partially

The last month has been pretty rough for thousands of Indian PayPal account holders especially merchants and businesses which do daily transactions. I myself have not been able to make any paypal withdrawals for more than a month, so I understand the frustration. I used an Xoom to withdraw money to Indian banks.

If yoPaypalu have not been aware till now, you can have a quick read on the issues via this blog about the paypal issues for Indians and an open letter from Farhad Irani. In a nutshell, Indian PayPal account holders have not been able to withdraw money to their local banks since the past month following some issues Reserve bank of India(RBI) and also they have stopped allowing personal gift transfers.

Just today I received an e-mail from Paypal stating that they have resolved the issue and still in talks with RBI to put strict regulations in practice. There will be a new exporters code field added and this detail will be required to enable transactions. This makes it possible for business owners to start withdrawing money to their local bank accounts but individual vendors are still at distress. Individual payments are still suspended.

Paypal has not yet published the complete information about the process that will be followed henceforth but the same would be conveyed by 1st March. Following is the email received from Paypal:

Dear Paypal User,

We have been diligently working with the RBI and our business partners to resume Indian bank withdrawals for the thousands of Indian businesses who depend on PayPal to sell their goods or services in the global marketplace. Today, we are happy to announce that the RBI has allowed us to continue local bank withdrawals for settlements for exports of goods and services.

We are currently making changes to comply with Indian regulations for settlements for exports of goods and services, and we anticipate that, as of Wednesday, March 3rd, customers will be able to use our bank withdrawal service. As part of the changes, you will be required to fill out a new field entitled ‘Export Code’ when you request a withdrawal. This information is required under the current laws of India in order to identify the nature of cross-border merchant transactions.

On Monday, March 1st, we will be back in touch with specific instructions on how you can move your money into your bank account.

Moving forward, the RBI has told us that PayPal needs specific approvals to allow personal remittances to India, which we currently do not have. Until we get these approvals, personal payments into India will remain suspended.

However, if you are an exporter, you will continue to be able to use the PayPal service for payments of goods and services. In fact, with the changes we are making to our system, PayPal is now set to be a more powerful engine for exporters in India. With purpose codes for export transactions and FIRCs (Foreign Inward Remittance Certificates), you should now be able to get the export related benefits you seek.


Though the above mail did bring a wave of relief to the business entities, the individuals are still left at vain. This issue needs to be resolved fast as the major part of the account holders are individual entities.

You can also withdraw money from PayPal to Indian Bank via Xoom. Get money in 2-3 days.

For more info, check out: ThePaypalBlog

Added to that: I would like you all to know that while the paypal issue was at its peek, I was trying out other services available and after quite an analysis and trials, I found MoneyBookers proving to be quite a worthy service and is a good Paypal alternative. If you haven’t tried it yet, do try. Though the paypal is going to be resolved, its always better to have more options. Signup for MoneyBookers

Update: Find out how to withdraw money from Paypal with the help purpose code here.

Piyush Agarwal
Piyush Agarwal is a part-time freelance webdesigner who loves to play with design and the web around. You can check out his designs on Technix Designs. He is also into Theatre and Photography.

2 Replies to “Paypal India Issue resolved but partially

  1. Paypal will stop Electronic Fund Transfer to india. and cheque is not cumming properly on addresses.

    1. Yes, even I received a mail from PayPal stating that they will be stopping the electronic fund transfer option yet again from 29th. I am not aware of the issues with cheque yet but I guess, it’s time for moving on to better alternatives.

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