PayPal users in India are getting bad news one after another due to the the tightening of foreign exchange rules by Reserve Bank of India.

In January 2011 RBI ordered to cap maximum limit to $500 and withdraw the amount within 7 days. Even though PayPal mailed all its Indian customer about these changes but was not very strict about it. Now the bad news is that you will not be able to transfer money above $500 and PayPal is going to reverse all previous payments (from March 2011).

Next thing is you have to withdraw the money within 7 days and for this now PayPal introduced Auto withdrawal feature so that money will be transferred to the respective bank account on the same day automatically.

To comply with the RBI guidelines all Indian PayPal users must add a Permanent Account Number (PAN), Purpose Code and a Bank Account in India.

To shop online with PayPal you need to have a credit card funded account. That means the money you are getting from abroad must go to your bank account immediately and if you want to buy something online then you have to draw the money from a Credit Card.