Dubai’s financial regulator temporarily prevents HDFC Bank from onboarding new clients or offering advisory services at its Dubai International Financial Centre (DIFC) branch due to alleged breaches of local compliance rules and onboarding procedures. However, this restriction only affects new business; services to existing clients will continue as usual.
HDFC Bank’s DIFC branch, which had 1,489 clients as of September 23, is now barred from onboarding new clients or offering a range of financial services, including investment advice, credit-related facilitation, and custody solutions, starting September 26. The move follows the Dubai Financial Services Authority’s concerns regarding onboarding compliance.
The bank is working to meet DFSA standards and is involved in an ongoing investigation. Although details are confidential, the DFSA’s notice questions client onboarding processes and services provided to customers not fully onboarded at the DIFC branch.
The restriction remains until a written update from the regulator. The DIFC branch cannot acquire or promote new clients but will support existing ones. These measures do not affect clients who started services before the notice. The DFSA cited onboarding and compliance issues. HDFC Bank said restrictions had little impact since the DIFC branch is a small part of its operations. The crackdown follows controversy over HDFC Bank’s marketing of risky AT1 bonds linked to Credit Suisse through its UAE operations, including DIFC and Bahrain accounts processing.
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The collapse of Credit Suisse in 2023 led to a write-down of AT1 bonds, resulting in significant losses for wealthy NRI investors and margin calls on leveraged trades. Authorities are currently examining whether the DIFC branch followed strict client onboarding standards for professional investors.
