MUMBAI: The Dubai monetary authority has debarred HDFC Bank from taking on new clients or offering financial advice, through the international financial centre (DFCI) branch for alleged violations of local rules and due to onboarding issues.
Existing customers, however, will not be affected.
As of September 23, 2025, the Dubai International Financial Centre (DFCI) branch had 1,489 customers, including joint account holders.
Effective September 26, the Dubai Financial Services Authority (DFSA) has prohibited our DIFC branch from soliciting or conducting any business with new clients who have not completed the branch’s onboarding process as of September 25, in activities including advising on financial products, arranging deals in investments, arranging credit, advising on credit and arranging custody, the second largest bank informed exchanges.
The filing added that 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.
While the bank did not disclose the details of the alleged violations leading to the action against it in the filing, which said that it has received the decision notice from DFSA, which points to alleged violations pertaining to financial services offered by the DIFC branch to customers not onboarded at the outlet, and also in the onboarding of customers at the DIFC branch.
The regulatory decision will be in force till the bank gets a communication from the watchdog, amending or revoking its decision in writing, the bank said.
The branch has also been prohibited from soliciting, onboarding or engaging in any financial promotions with any new client under the same criteria.
Existing clients, however, will continue to be served, it added.
The restrictions do not affect onboarding or servicing of clients who were previously offered or provided financial services and who were not yet completed onboarding, so long as those dealings were already initiated before the issuance of the notice.
The DFSA’s notice cites several concerns including handling of financial services with clients who have not completed onboarding, issues in onboarding processes, and other related compliance shortfalls.
HDFC Bank said the restrictions are not material to its overall operations or financial position, adding business from the DIFC branch makes up only a small portion of its operations.
The latest regulatory move follows a controversy that has been ongoing for two years, centred on the alleged mis-selling of high-risk additional tier-1 (AT1) bonds of the Swiss bank Credit Suisse.
Investors had accused HDFC Bank of promoting these instruments through its UAE network.
The process reportedly involved advisory services from officials at the DIFC, relationship management by staff at its Dubai representative office, and booking of accounts through the Bahrain branch, according to a media reports.
These AT1 bonds were written down in 2023 as part of Credit Suisse’s collapse and subsequent bailout and merge with UBS, leaving many wealthy non-resident Indian investors with steep losses and triggering margin calls on leveraged exposures.
Authorities began looking into whether the DIFC unit ensured proper client onboarding, given that the centre operates under its own financial regulations and applies a more stringent regime for professional clients.