Why HDFC Bank was Barred from Onboarding New Clients in Dubai? Explained in Detail

The Dubai Financial Services Authority (DFSA) has stopped HDFC Bank’s Dubai International Financial Centre (DIFC) branch from onboarding new clients or offering financial services to them. This action was taken after the DFSA found issues with the bank’s client onboarding process and how it provided services to customers who were not properly registered under DFSA rules.

From September 26, 2025, HDFC Bank’s DIFC branch cannot start any new business with clients who had not completed the onboarding process by September 25, 2025. The restrictions apply to several financial services, including:

• Advising on financial products
• Arranging investment deals
• Helping with or advising on credit facilities
• Providing custody services
• Making financial promotions

According to HDFC Bank, the DIFC branch is not allowed to offer these services to any new clients. However, existing clients who were already registered will not be affected and will continue to receive services. The bank also said that clients who had begun but not completed the onboarding process may still be allowed to finish it under certain conditions.

The DFSA’s decision comes amid serious concerns about the bank’s handling of client onboarding and services provided to unregistered customers. Reports also suggest that HDFC Bank may have sold high-risk Credit Suisse Additional Tier 1 (AT1) bonds in the UAE, possibly breaking investor protection rules.

Some investors claim they were wrongly marked as “professional clients” so they could invest in these complex products, which are usually limited to experienced investors under UAE laws. In India, AT1 bonds are also not sold to retail investors except under strict conditions.

HDFC Bank responded by saying that the Dubai branch’s business is not significant to its overall operations or financial performance. The bank added that it has already started taking steps to follow the DFSA’s directions and is fully cooperating with the investigation to fix the issues as soon as possible.

The ban will remain until the DFSA decides to change or remove the restrictions. As of September 23, 2025, HDFC Bank’s DIFC branch had 1,489 customers, including joint account holders.

This situation shows that regulators are keeping a close watch on global banking activities, especially in financial centers like Dubai, where strict compliance and investor protection are key priorities. For now, HDFC Bank cannot add new clients in Dubai until it fully meets the DFSA’s requirements.