Paypal is reversing payments made by buyers to personal accounts of sellers in India, but the status of withdrawals to Indian banks shows completed.
At the moment, it seems due to either an issue with RBI requiring more documentation for the transactions or transaction details from Paypal or due to Paypal having issues with their partners/stakeholders in India.
Rentacoder.com has a notice:
Site Wide Message:
Attention Indian coders who were paid via PayPal this payment period: PayPal is experiencing internal issues with payments to India. We sent all payments to them by Thursday February 4th (in the same manner we have done every month prior). Thursday 67 Indian PayPal users received an email from PayPal stating “We reversed this payment because we have stopped allowing personal payments to be sent to or from India. “…despite the fact that the payments were not sent in this manner. Unfortunately today PayPal reversed an additional 137 payments (this time supposedly because of the shipping address). We are working with our PayPal rep and have escalated this issue to PayPal management, to determine if there is any way we can send these through PayPal. However, if we cannot, we may have to ask you to switch to another payment method. We will let you know more once we find out more.
Odesk has a forum post for it.
Here are some other links mentioning it having lots of user comments
- http://www.techcrunch.com/2010/02/05/paypal-halts-india/ (the most popular link)
- http://www.pluggd.in/paypal-india-outage-no-payments-to-or-from-india-297/
- http://www.quickonlinetips.com/archives/2010/02/paypal-stops-india-payments/
- http://www.go4expert.com/forums/showthread.php?t=20869
- http://techie-buzz.com/annoyances/paypal-stops-personal-payments-for-india.html
- http://www.inforum.in/lounge/5605-problems-paypal-india.html
- http://www.lensroll.com/blog/breaking-news/indian-lensmasters-big-unpleasant-surprise/
- http://forums.digitalpoint.com/showthread.php?t=1681660
- http://forums.digitalpoint.com/showthread.php?t=1681603
And the following post seems to confuse the issue some more.
Wierdly, the following is the only result on bing. 
And it doesn’t show up on google.
Some more links
http://www.earnmoneyspace.com/forum/index.php?topic=48605.msg487063
http://www.binaryturf.com/advisory-paypal-reverses-personal-payments-indian-accounts/
http://agilebanking.posterous.com/paypal-halts-personal-payment-transactions-fr
Recent issues with PayPal withdrawals to Indian Banks & more over payments just randomly being reversed back to the senders will have a deep impact on PayPal’s reputation. It raises so many questions like (THIS MIGHT CONTAIN SPOILERS):
A) Should we trust PayPal in future?
ANS: ABSOLUTELY NO
B) Are they really concerned about our Money?
ANS: ABSOLUTELY NO, After a long period of two weeks we receive an apology letter stating that “We are sorry we goofed up opps!”? and stuff like “Your money just got sacked since this is nothing serious to us we are just doing a drill of playing a game with your hard earned money”?
C) Is RBI responsible for this?
ANS: UNQUESTIONABLY MAYBE, So, Question is why this is happening in India and nowhere else? Question is why we are being kept behind curtains and dark? Question is why Moneybookers and other Payment systems are working but PayPal is not? you just want to exclude the RBI out of this since they are least concerned with us. Everyone failed here! RBI off course you cant expect them to give you a comforting truth so a comforting lie should suffice you! And PayPal Ow man no shit a multinational company failing to inform and notify of an issue of this magnitude. That was an AWESOME combination of pure frustrating, destroying trust & spreading chaos.
D) So what does PayPal tell us now?
ANS: “We are sorry, but your valuable to us so please give us another opportunity to goof up and play some more engaging games with your money” and “We just love to make more profits by giving you a pathetic exchange rate”
D) What now?
ANS: DTA (Don’t Trust Anyone) Get your sleeves up against them and find your own ways to get paid over any other medium that serves better, communicates better and keep them in plenty. If one fails other should work out.
Ive let all my clients know about this issue and advised them (in advance unlike PayPal) to switch over to some other Payment system which is reliable, responsible and does the main thing “ACTION” at PAR. The truth will probably be dead and berried RIP about what happened because the shame and disgust they bring upon themselves is apocalyptic now.