PayPal has announced that from july 29, 2010 they have stopped electronic bank withdrawals to customers in India because of regulatory instructions. You will only be able to withdraw money using cheque withdrawal ( paypal will give you a refund of 5$ for every cheque request)

Here is how to request for a cheque withdrawal:

• Log into your PayPal account, click on ‘Withdraw’.
• Click on the ‘Request a cheque from PayPal’ link.
• Enter the withdrawal amount and select your mailing address, then click ‘Continue’.
• Click ‘Submit’ to confirm your request.

Paypal max monthly withdrawal limit is $2,500 USD in India per month by cheque. It will take around 4 to 6 working days to process the cheque.

Also Read: How to withdraw money from Paypal to your bank account in India.

Update August/01/2010: PayPal has announced the restoration of its electronic withdrawal services. Indian paypal users can withdrawal funds to local.