Best I understand it, this is required by Indian rules. They cannot permit you to carry out "banking" transactions with your paypal account. Meaning the dollars received must get back to a "real" bank account denominated in INR. And any USD you need to send out must be obtained by sourcing INR from your bank account, going thru RBI to get those USD (so they can monitor and control forex flows, including annual limits etc).
In brief, paypal is not a bank (in India) and is not allowed to act like one. Any money it receives it needs to transfer to a real bank immediately, and money to be sent out must come from a real bank as well.
Comments
Best I understand it, this is required by Indian rules. They cannot permit you to carry out "banking" transactions with your paypal account. Meaning the dollars received must get back to a "real" bank account denominated in INR. And any USD you need to send out must be obtained by sourcing INR from your bank account, going thru RBI to get those USD (so they can monitor and control forex flows, including annual limits etc).
In brief, paypal is not a bank (in India) and is not allowed to act like one. Any money it receives it needs to transfer to a real bank immediately, and money to be sent out must come from a real bank as well.