The Reserve Bank of India blocks PayPal's services in the country because it is not properly registered as a remittance provider.

NEW DELHI — Thousands of small companies here are facing a cash crunch after India’s top bank regulator suspended some PayPal services in the country.

Many small information technology companies and freelance computer professionals rely on PayPal, the online money transfer company, to receive payments from overseas clients. PayPal allows them to bypass cumbersome and expensive international bank transactions.

But the Reserve Bank of India said Wednesday that despite the online payment service’s ubiquity in India, it is not properly registered.

“Providers of cross-border money transfer service need prior authorization from the Reserve Bank under the Payment and Settlement Systems Act,” a spokeswoman for the Reserve Bank of India, Alpana Killawalla, said in an e-mailed response to questions. “PayPal does not have our authorization.”