UAE regulator bars HDFC Bank’s Dubai branch from onboarding new clients amid probe: Report

The Dubai branch of HDFC Bank, operating under the Dubai International Financial Centre (DIFC), has been barred by the UAE regulator from onboarding new clients during an ongoing investigation into its client onboarding practices. The Dubai Financial Services Authority (DFSA) issued a directive restricting the branch from providing financial services for new customers, including advising on financial products, arranging investments and credit, providing custody, or making financial promotions. This move follows scrutiny over whether the bank’s processes meet DIFC’s strict requirements for onboarding “professional clients.” The development was first reported by the Economic Times.

According to HDFC Bank, the branch’s operations are not material to the bank’s overall business or financial position, with the branch serving 1,489 customers as of 23 September 2025. The bank has stated its commitment to address regulatory concerns and comply fully with the DFSA’s directives.

Regulatory examination of HDFC Bank’s practices began after concerns surfaced regarding the adequacy of its client onboarding in the DIFC, a jurisdiction that maintains a more rigorous framework for professional investors compared to other regions. The DFSA’s order prohibits the branch from providing financial services to new clients until further notice. These measures reflect broader efforts by UAE authorities to reinforce compliance with established financial standards in the DIFC.

According to the notice, the branch in Dubai may not offer new clients advisory services on financial products, arrange deals in investments or credit, provide custody, or make financial promotions. However, these restrictions do not apply to existing customers or potential clients who had already been offered services but had not yet completed onboarding. The DFSA has stated that the order will remain effective until formally amended or revoked in writing.

The restrictions were imposed after the regulator expressed concerns about the branch’s practices in relation to financial services provided to customers who were not fully onboarded, as well as gaps in the onboarding process itself. The DFSA’s intervention is part of ongoing efforts to address regulatory lapses and safeguard compliance for all market participants operating within the DIFC.

These latest supervisory actions stem from the fallout of a controversy involving the alleged mis-selling of high-risk Credit Suisse additional tier-1 (AT1) bonds via HDFC Bank’s UAE operations. The bonds were written down in 2023 following the collapse of Credit Suisse, which left several wealthy non-resident Indian investors facing significant losses and margin calls.

The case centres on whether HDFC Bank’s UAE operations, including advisory from DIFC-based officials, relationship management from the Dubai office, and account booking through the Bahrain branch, were involved in presenting these risky products to clients without adequate disclosure or proper onboarding. The regulatory focus on DIFC underscores the importance placed on procedural rigour and investor protection within the jurisdiction.

HDFC Bank has reiterated that its DIFC branch’s business is not significant in terms of broader operations. As of late September, the branch maintained 1,489 customers, including joint account holders. The bank has moved quickly to implement compliance measures and to engage proactively with the regulator as required by the order.

"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," said the company in a statement. The DFSA has not indicated when or if the restrictions will be lifted, maintaining that the order will remain until written amendment or revocation.