HDFC Bank’s DIFC branch restricted from onboarding new clients

Core Viewpoint - The Dubai Financial Services Authority (DFSA) has restricted HDFC Bank's Dubai International Financial Centre (DIFC) branch from onboarding or soliciting new clients due to concerns over its onboarding practices and financial services offered to unapproved customers [1][2]. Group 1: Regulatory Actions - The DFSA has issued a decision notice prohibiting the DIFC branch from engaging in financial services for new clients, including advising on financial products and offering custody services [1]. - The order will remain in effect until it is changed or revoked in writing, indicating a serious regulatory concern [2]. Group 2: Impact on HDFC Bank - HDFC Bank has stated that the DIFC branch's operations are not significant to its overall business and financial position, with only 1,489 customers as of September 23 [3]. - The bank has initiated steps to comply with the DFSA's directives and is committed to addressing the regulator's concerns promptly [3]. Group 3: Background Context - The restrictions follow a controversy related to the alleged mis-selling of high-risk Credit Suisse additional tier-1 (AT1) bonds, which has led to investigations into the onboarding practices of clients in the DIFC [4]. - Investors have accused HDFC Bank of promoting these high-risk products through its UAE operations, which resulted in significant losses during Credit Suisse's collapse [4].