PayPal deprives Indian customers of option to withdraw funds electronically

PayPal has unveiled its intention to deprive its Indian customers of the ability to withdraw funds from accounts electronically.

Earlier this year, the e-payments company had to suspend temporarily personal payment transactions from and to India, when the Reserve Bank of India (RBI) concluded that PayPal was not in compliance with all relevant regulatory requirements.

Today in the morning, Indian users have got email notifying them that they would soon be removing the ability to withdraw funds from accounts electronically.

In an updated announcement, the company acknowledges that starting July 29, Indian users will only be able to request for a cheque withdrawal of funds from their PayPal accounts. But PayPal added that it would be waiving the $5 cheque withdrawal fee from July 29, 2010 onwards, at least “until further notice”.

Such an action PayPal is to accomplish goes in compliance with regulatory instructions as the reason for the abrupt removal of the electronic withdrawal facility. PayPal does say they’re working to restore the service, and has set up a special website where its users can keep track of further changes, and also find instructions for the cheque withdrawal process.