Dubai:  The Dubai Financial Services Authority (DFSA) has barred HDFC Bank’s Dubai International Financial Centre (DIFC) branch from onboarding new clients and undertaking fresh business activities, effective from September 26, 2025. The restriction covers a wide range of financial services, including advising on financial products, arranging investment deals, providing credit services, and conducting financial promotions for new clients.

The DFSA’s action comes amid concerns over the branch’s client onboarding processes and its provision of financial services to clients who were not formally onboarded. The regulator has also scrutinized the branch over alleged mis-selling of high-risk Additional Tier-1 (AT1) bonds issued by Credit Suisse, which led to significant losses for retail investors following the Swiss bank’s collapse.

As of September 23, 2025, the DIFC branch had 1,489 onboarded clients, including joint account holders. HDFC Bank has stated that the operations of its DIFC branch are not material to the overall financial position of the bank, and it does not expect the restriction to have a significant impact. The prohibition will remain in effect until further notice or until amended by the DFSA.

HDFC Bank has initiated steps to comply with the DFSA’s directives and is working to address the regulator’s concerns. The bank emphasized that existing clients will continue to receive services, and those previously provided financial services but not formally onboarded may still be accommodated.

This regulatory action highlights the importance of strict compliance with onboarding procedures and the provision of suitable financial products to clients, reflecting the challenges faced by banks operating in international markets with differing regulatory standards.