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PayPal keeps all bank/card withdrawal request on hold since last week of Jan'10. Now they have also started reversing all Personal Payments. A spokesman for the service said Saturday that "personal payments" to and from India are being blocked. Transfers to banks in India are being suspended as well.

The spokesman, Anuj Nayar, said PayPal is taking the step while it answers questions that have arisen about the service. He declined to elaborate.

Nayar said the suspensions began Jan 28. He wrote in a blog post that PayPal, which is owned by eBay Inc., hopes "to resolve the situation as quickly as possible." Here is the link of his post http://bit.ly/cNAjK1

Whatever may be the reason but Indian PayPal users are in serious trouble. India is the place for a huge number of small and large Freelancers and they mainly receive the funds through PayPal. Normally the funds are withdrawn on every month end. The withdrawal request placed from 27th Jan seems to be not yet deposited at any of the local bank.

It appears that PayPal is facings some Indian Gov. regulatory problems and probably in clarification with some issues with RBI. However the reason behind reversing the personal payments are still not cleared. 

There has been a long discussion going on this topic on Digitalpoint.  http://dp.ly/tzyau