DFSA bars HDFC Bank from onboarding new clients at Dubai Branch

India’s largest private sector lender, HDFC Bank, has been barred by the Dubai Financial Services Authority (DFSA) from onboarding new clients or undertaking fresh business through its Dubai International Financial Centre (DIFC) branch.

According to a stock exchange filing, the action follows the bank’s failure to comply with regulatory requirements relating to dealings with customers not onboarded by the DIFC branch, as well as lapses in the way it advised and arranged credit for DIFC clients.

ET had first reported in its May 29 edition that HDFC Bank was under regulatory scrutiny after complaints from bond investors over the alleged mis-selling of high-risk Credit Suisse bonds.


HDFC Bank, in its exchange filing, said, “The DIFC Branch of the Bank has been prohibited from soliciting or conducting any business with new clients that constitutes or may constitute the carrying on of financial services, including advising on financial products, arranging deals in investments, arranging credit, advising on credit, and arranging custody. The branch is also barred from soliciting, onboarding, or engaging in any financial promotions with new clients.”

HDFC Bank clarified that the business conducted at its DIFC branch is not material to the bank’s overall operations or financial position, and therefore no significant impact is expected. As of September 23, 2025, the branch had 1,489 customers onboarded, including joint holders.

The bank said that the prohibition does not apply to the continued servicing of existing DIFC clients or to the onboarding and servicing of customers who had previously been offered or provided financial services but were not formally onboarded at the branch. The prohibition will remain in effect until the DFSA amends or revokes it in writing.

HDFC Bank said it has already initiated steps to comply with the directives outlined in the notice and remains committed to working with the DFSA to promptly remediate and address its concerns.

ET had earlier reported that a key concern for the DFSA was the manner in which HDFC Bank conducted business with customers through multiple legal entities across jurisdictions. In some cases, a client may have been engaged by relationship managers from the bank’s UAE office, while receiving investment advice from officials attached to its Dubai International Financial Centre (DIFC) operations, even as the actual accounts were booked with HDFC’s full-service branch in Bahrain. Investors would open and fund accounts with the Bahrain branch to purchase bonds — a practice that is not uncommon in cross-border banking.

DIFC, a financial free zone, functions as a separate jurisdiction under an independent legal system, different from general UAE laws. Financial services conducted in and from DIFC are regulated by Dubai Financial Services Authority (DFSA), an independent regulator.