Dubai regulator bars HDFC Bank’s DIFC branch from taking new clients

Dubai: The Dubai Financial Services Authority (DFSA) has restricted the Dubai International Financial Centre (DIFC) branch of HDFC Bank Limited from onboarding new clients or promoting financial services until further notice.

In a statement on Thursday, September 25, the regulator said the branch cannot advise on financial products, arrange investment deals, arrange or advise on credit, or arrange custody for customers who had not completed onboarding by that date. It is also barred from marketing financial services to prospective clients.

The directive took effect on Friday, September 26, and will remain in place until amended or revoked in writing by the DFSA under Article 75(1) of the Regulatory Law 2004.

HDFC Bank’s disclosure

In a stock exchange filing on September 26, the Mumbai-headquartered lender confirmed receiving the notice and said compliance measures had been initiated. It added that the branch will continue servicing its 1,489 existing customers as of Tuesday, September 23, including joint holders.

“The business undertaken at the DIFC branch is not material to the Bank’s operations or financial position, and no significant impact is expected,” the disclosure signed by Company Secretary Ajay Agarwal stated.

HDFC Bank said it remains committed to cooperating with the DFSA, addressing regulatory concerns and completing remedial actions at the earliest.

Earlier DFSA scrutiny

HDFC Bank has already faced regulatory pressure in Dubai this year. In June, Khaleej Times reported that the DFSA examined allegations the lender sold Credit Suisse Additional Tier-1 (AT1) bonds to retail investors who did not qualify under local rules.

The high-risk instruments were written down to zero during Credit Suisse’s emergency merger with UBS in March 2023, leaving investors with heavy losses.