Dubai, September 27, 2025 — The Dubai Financial Services Authority (DFSA) has issued a formal directive restricting HDFC Bank’s Dubai International Financial Centre (DIFC) branch from onboarding new clients, citing serious concerns over compliance and client handling procedures.
Effective September 26, the DIFC branch has been prohibited from soliciting or conducting business with any new client who had not completed the onboarding process as of September 25. The restrictions cover a wide range of financial services, including advising on financial products, arranging investment deals, extending or advising on credit, and offering custody services. The branch is also barred from engaging in financial promotions targeting new clients.
Existing customers will continue to be served, and clients who had previously received financial services but were not formally onboarded may still be accommodated, provided their dealings were initiated before the issuance of the notice. As of September 23, the DIFC branch had 1,489 customers, including joint account holders.
The DFSA’s action follows a two-year-long controversy involving the alleged mis-selling of high-risk Credit Suisse additional tier-1 (AT1) bonds. Investors had accused HDFC Bank of promoting these instruments through its UAE network, with advisory services reportedly provided by officials at the DIFC branch, relationship management handled by staff at its Dubai representative office, and account booking routed through the Bahrain branch. The AT1 bonds were written down in 2023 following Credit Suisse’s collapse, resulting in significant losses for several non-resident Indian investors.
The DFSA’s investigation is focused on whether the DIFC unit ensured proper onboarding of clients, especially given the centre’s stringent regulatory framework for professional clients. The regulator cited deficiencies in onboarding processes and the handling of financial services for clients who had not completed formal onboarding.
In response, HDFC Bank stated that the DIFC branch’s operations are not material to its overall business or financial position. The bank has initiated steps to comply with the DFSA’s directives and affirmed its commitment to cooperate fully with the ongoing investigation. “We are working closely with the DFSA to promptly remediate and address the concerns raised,” the bank said in an exchange filing.
