Dubai: HDFC Bank Faces DFSA Curbs, Barred From Accepting New Clients

HDFC Bank Limited has announced that its Dubai International Financial Centre (DIFC) branch is facing restrictions from the Dubai Financial Services Authority (DFSA). Effective September 26, the branch cannot engage with new clients who haven't completed onboarding by September 25. This includes advising on financial products, arranging deals in investments, and arranging credit.

The DFSA's decision also prevents the branch from soliciting or promoting financial services to new clients under the same criteria. However, existing clients will continue to receive services. Clients who had begun onboarding before the notice can still complete it. The DFSA's notice highlights issues like handling services for clients without completed onboarding and other compliance shortfalls.

Compliance Concerns and Client Onboarding

As of September 23, 2025, HDFC's DIFC branch had 1,489 customers, including joint account holders. The bank stated that these restrictions are not significant to its overall operations or financial position since business from this branch forms only a small part of its operations. "The bank has already initiated necessary steps to comply with the directives in the above-referred notice and is committed to work with the DFSA in its ongoing investigation and to promptly remediate and address the DFSA concerns at the earliest," HDFC said in an exchange filing.

This regulatory action follows a two-year controversy involving alleged mis-selling of high-risk Credit Suisse additional tier-1 (AT1) bonds. Investors accused HDFC Bank of promoting these bonds through its UAE network. The process reportedly involved advisory services from DIFC officials, relationship management by staff at its Dubai office, and account booking via Bahrain.

Impact on HDFC Bank's Operations

The AT1 bonds were written down in 2023 due to Credit Suisse's collapse, causing significant losses for many wealthy non-resident Indian investors and triggering margin calls on leveraged exposures. Authorities are investigating whether the DIFC unit ensured proper client onboarding as it operates under stringent regulations for 'professional clients'.

HDFC Bank has assured that it is taking necessary steps to comply with DFSA directives and is cooperating with ongoing investigations. The bank aims to address concerns promptly while maintaining service continuity for existing clients.