The reasons mentioned by your source are absolutely rubbish. Infact the system is on 'halt' mode as the system was abused excessively and there wasn't any tracking of the said funds. And also RBI's acts and updated policies have contributed to the same.
I don't think that 89% of the personal payments are fraud. These records may be build ups. How come it can be so? All DP Indians should be frauds if you need to make the sentence true.. So are you agreeing that you were also doing some frauds?? As Chandan told it can be 15% not more.. Don't spread unauthorized news please.
PayPal should resolve the problems at their earliest. Paypal cannot ignore India from its list! PayPal users should also go by the TOS of PP. We cannot support any kinda fraudulent act of any user!