Dubai Regulator Bars HDFC Bank's DIFC Branch from Onboarding New Clients

DFSA Imposes Restrictions on HDFC Bank's Dubai Branch

The Dubai Financial Services Authority (DFSA) has issued a directive prohibiting HDFC Bank's Dubai International Financial Centre (DIFC) branch from soliciting or conducting business with new clients. The restriction, effective September 26, 2025, also bars the branch from engaging in any financial promotions with prospective clients. This action by the independent regulator of financial services in the DIFC stems from identified regulatory concerns regarding the bank's operations in the free zone. The directive was communicated to HDFC Bank via a decision notice dated September 25, 2025.

Scope of the Prohibition and Regulatory Concerns

The DFSA's prohibition encompasses a range of financial services for new clients, including:

• Advising on financial products
• Arranging deals in investments
• Arranging credit
• Advising on credit
• Arranging custody

According to HDFC Bank's exchange filing, the violations at the DIFC branch included providing financial services such as advising or arranging financial products and credit for customers not formally onboarded by the branch, along with issues related to customer onboarding processes and other compliance shortfalls. This regulatory scrutiny is reportedly linked to an ongoing investigation, which has roots in a two-year-old controversy concerning the alleged mis-selling of high-risk Credit Suisse Additional Tier-1 (AT1) bonds to retail investors who did not meet the qualification criteria under local rules. The DIFC maintains a more rigorous framework for 'professional clients' compared to other regions.

HDFC Bank's Response and Impact Assessment

HDFC Bank has acknowledged receipt of the DFSA's directive and has stated its commitment to complying with the instructions. The bank confirmed that it has 'initiated necessary steps to comply with the directives' and is dedicated to working with the DFSA to 'promptly remediate and address the DFSA concerns at the earliest'. As of September 23, 2025, the DIFC branch had 1,489 customers onboarded, including joint holders. The bank clarified that the prohibition does not affect the continued servicing of these existing customers. Furthermore, it does not apply to the onboarding and servicing of clients who may have been previously offered or provided financial services but had not yet been formally onboarded, provided these dealings were initiated before the notice. HDFC Bank emphasized that the business undertaken at its DIFC branch is 'not material to the Bank's operations or its financial position', and therefore, 'no significant impact' is expected on the bank's overall operations or financial standing. The restriction will remain in place until it is amended or revoked in writing by the DFSA.