HDFC Bank, India’s largest private sector lender, has come under regulatory glare in the United Arab Emirates (UAE). On Saturday, the bank confirmed that
its Dubai International Financial Centre (DIFC) branch has been barred by the Dubai Financial Services Authority (DFSA) from onboarding or soliciting new clients, following concerns over its customer onboarding practices. The restrictions mean the DIFC branch cannot provide financial advisory, arrange investment deals, extend credit, or offer custody services to new customers until further notice. The order also prohibits the branch from making any new financial promotions. However, existing customers and clients already in the process of onboarding remain unaffected. The DFSA’s action comes after concerns were raised about lapses in the onboarding of clients and possible gaps in compliance with DIFC’s stringent financial services framework. Regulators noted that services had allegedly been extended to customers before proper onboarding was completed, violating local requirements. The controversy has roots in the mis-selling of Credit Suisse’s Additional Tier-1 (AT1) bonds in 2023, which wiped out investors’ holdings during the Swiss bank’s collapse. Wealthy non-resident Indian (NRI) clients alleged that HDFC Bank’s UAE staff played a role in recommending and distributing these risky products. The matter drew scrutiny because:
- Advisory was allegedly offered by the DIFC office.
- Relationship management was handled by Dubai representatives.
- Account booking was routed through the Bahrain branch.
Regulators have since been examining whether the DIFC operations properly classified and onboarded these clients, who were supposed to meet stricter eligibility criteria as “professional clients” under UAE laws.
HDFC Bank’s clarification
In a stock exchange filing, HDFC Bank said the DIFC branch is not material to its overall operations. As of September 23, 2025, the branch serviced 1,489 customers (including joint account holders), a small fraction of the bank’s global base.
“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,” the lender said.
The episode underscores growing regulatory scrutiny on Indian banks’ overseas operations, especially in financial hubs like Dubai where NRIs are major clients. With AT1 bond losses still fresh, regulators are wary of mis-selling, aggressive marketing, and improper client classification.
For HDFC Bank, the immediate financial impact is limited, but the reputational stakes are high. Dubai is a key market for serving affluent NRIs, wealth management clients, and high-value remittances. A prolonged restriction could weaken its positioning against global and regional competitors.
The DFSA has not provided a timeline for lifting the restrictions, saying the order will remain “until amended or revoked in writing.” The regulator’s ongoing investigation will determine whether compliance fixes are sufficient or whether further penalties may follow.
Industry watchers say HDFC Bank will need to tighten its onboarding procedures, enhance disclosures, and rebuild regulator trust. Meanwhile, Indian investors , particularly NRIs in the Gulf , will be closely tracking the developments to assess whether this affects their wealth management ties with the lender.
