Paypal India Withdrawal Possible in March 2010

Today I received an email communication from Paypal today that confirmed Paypal will resume withdrawals to Indian local banks from 3rd March 2010 onwards. They were in talks with RBI (Reserve Bank of India) and RBI has allowed Paypal India to to resume bank withdrawals for settlements for exports of goods and services. Paypal is currently making changes in their system to comply with RBI guidelines, which will require every Paypal India user to fill a ‘Export code‘ while they withdraw money to their Indian bank account (ICICI, HDFC, Punjab National Bank, OBC, HSBC, Citibank anything).

What does this mean for you?

If you are business in India who is selling goods and services globally, you may be good to go and use Paypal to withdraw the payments. If you don’t have import export code yet, you may read about Export code required.

There is still no word about individuals payments to India. This bit is still confusing for individuals.

Paypal halted the personal payments to Indian banks after authorities in India objected to no compliance with Indian regulations on 26th Jan 2010.

Here is the email I received -

Dear XYZ,

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.

You can check the PayPal blog for additional updates.

We thank you for your business and for your patience during the past few weeks.

Sincerely,

PayPal

So what changes you are expected to do in your Paypal account?

I would imagine that Paypal will ask you to accept the new terms and conditions in the first week of March and you will have to fill the ‘Export code‘ while withdrawing the money. My suggestion to individuals is not to rush on withdrawals immediately, meanwhile the things would become clearer on individual payments.