For most users of  Paypal,  there has been no major update this week on transfers from Paypal to Indian bank accounts.

Direct transfer of funds from Paypal to Indian bank accounts is still not possible.  Paypal seems to be contacting  business account holders with large balances of over $10 K  and offering them the facility to withdraw the balance by wire transfer to their bank accounts.  Many eBay sellers need the funds for buying new stocks. However, many banks charge a fee for incoming wire transfer , but the exchange rates are usually higher for  SWIFT transfers than the rate Paypal offers. The eBay sellers seem to have been contacted by Paypal directly or through their Paypal account manager.

Currently Indian Paypal account holders can withdraw using a credit card or check. For both there is a $5 withdrawal fee, but the $5 fee for checks will be reimbursed according to the official Paypal blog. Earlier there was no limit on withdrawals for certain business accounts, but now there is $2500 monthly limit for check withdrawal.  The checks are sent in Indian Rupees, drawn on Citibank.

Many Indian freelancers with a verified Premier and Personal account could withdraw money from their Paypal balance using Xoom , but now they are facing problems since intra-India transfers using Xoom seem to be getting blocked since 21 February. RBI seems to have imposed restrictions on Xoom and the issue may be resolved in 2-3 months.

The issue seems likely to get resolved by March 10, 2010, when there is going to be a new Paypal policy update and all payments to Indian personal accounts will be charged a fee similar to that charged for premier and business accounts.