PayPal has just announced that Indian PayPal users can withdraw to your bank account now - a feature previously available only to US Customers. You can withdraw to State Bank of India , Bank of India, Canara Bank, Union Bank of India, HDFC Bank, ICICI Bank, ING VYSYA Bank, UTI Bank, Standard Chartered Bank, HSBC, Citibank currently.
IMHO, a very wise decision on PayPal's part! :)
More info at: http://pages.ebay.in/paypal_bankaccount/