You should be okay providing Paypal with a credit card. I'm pretty sure you won't be able to verify your identity and people sending you payment will see that you are unverified. I think it really limits you when you don't have your account verified. I'm guessing that Paypal would have to mail you a check when there are funds in your account.
I don't remember what you need to start a paypal account, but once you've got it you can maintain it just like a bank account- carrying a balance, buying things from it, selling things to fund it, making withdrawals by check, etc. So if a credit card is all it takes, you should be set!
You need a credit card to get verified. The check/bank withdrawal may or may not be available depending on which country you sign up under. However you can send the money to other paypal members. Generally using Paypal for high value transaction should not be preffered. They have no protection for both buyers as well as sellers.
I am registered with STPI and therefore under RBI Terms and Conditions, I have a US Bank account for my company. I withdraw funds in there. No income tax on USD Income under STPI.
I am a New Zealand resident and have a New Zealand bank account and credit card attatched to my PayPal account.
I can add funds from my credit card at no charge and I can withdraw funds from my PayPal account to my bank account at a $1NZD fee for any amount of money.
Again, something like that in Canada - they charge me a percentage of what I'm withdrawing. I don't have a credit card yet or I'd be a verified member, but without a credit card you are able to buy things, and send/recieve money (so long as your paypal balance permits), however certain sites such as eBay won't let you sell without a credit card because they make about 10% off the auction and wan't to ensure they recieve the money - so once they auction closes they hit the credit card.