RBI and Paypal India Issue : Transaction limit raised from 500$ to 3000 $

RBI and Paypal are finally seem to be seeing eye-to-eye on the online payment regulations. Indian users can now receive transactions uption 3000$ via paypal

Paypal Annoucement dated Oct 13 2011

We’ve been notified by the Reserve Bank of India (RBI) that our merchants in India can receive export-related payments for goods and services into their PayPal account up to USD 3000 per transaction (raised from USD 500 per transaction), effective immediately.

RBI circular dated Oct 14 2011@ RBI website

Para 2: The present instructions have been reviewed in the context of requests received from exporters for suitable enhancement of the value of the transaction from USD 500. Accordingly, it has now been decided to increase the value per transaction from USD 500 to USD 3000 for export related remittances received through OPGSPS. The revised directions will come into force with immediate effect.

All other terms and conditions issued vide A.P. (DIR Series) Circular No.17 dated November 16, 2010 shall remain unchanged

Para 2:vi  - The balances held in the NOSTRO collection account shall be repatriated and credited to the respective exporter’s account with a bank in India immediately on receipt of the confirmation from the importer and, in no case, later than seven days from the date of credit to the NOSTRO collection account.

Although the news suggest that RBI and Paypal have been in “serious discussion” in this matter, my intuition strongly suggests that this could be the result of  innumerable blog posts, comments, tweets, by our online community. RBI has never once in the past hinted at the impact the online community has over social issues, now we know that “we are being watched”  and “ our opinion does make an impact”.

This is indeed a great news  for most fellow freelancers, and SMBs. This raised limit will allow them to conduct business as usual, without having to cut a sorry face with clients saying “ Due to paypal restrictions….. please…blah blah blah….”

The RBI notification clearly states the transaction limit and the 7 day stipulation period. So, I think i understand when paypal has enforced auto-withdrawal ,  inclusion of PAN number, export code for all Paypal Indian users. However, what still boggles me is,

WHY ARE WE NOT ALLOWED TO MAKE USE OF OUR EXISTING PAYPAL  BALANCE  TO PAY FOR GOODS AND SERVICES

1. Our Paypal account is linked to PAN
2. Purpose code @ paypal ensures nature of transaction
3. Paypal account retains history of transaction : remittance and payments.
4. All of the above confirms a layman’s idea that every transaction can be traced back to the user.
5. RBI notification does not mention anything about NOT USING PAYPAL BALANCE

WHY ARE WE NOT ALLOWED TO MAKE USE OF OUR EXISTING PAYPAL  BALANCE TO PAY FOR GOODS AND SERVICES