HDFC Bank on Saturday said that its Dubai International Financial Centre ( DIFC) branch has received a decision notice from the Dubai Financial Services Authority ( DFSA), restricting it from onboarding or soliciting new clients.
According to the notice, the DIFC branch has been prohibited from engaging in financial services for new clients, including advising on financial products, arranging deals in investments, arranging credit, and providing custody services. The branch has been also barred from making financial promotions to new clients.
The restrictions, however, do not impact existing customers or clients who were previously offered financial services but had not yet been onboarded. The DFSA order will remain effective until it is amended or revoked in writing.
The regulator highlighted concerns regarding the branch’s practices around financial services provided to customers not fully onboarded and issues linked to its onboarding process.
HDFC Bank clarified that the DIFC branch operations are not material to its overall business and financial position. As of September 23, the branch had 1,489 customers, including joint account holders.
"The bank has already initiated necessary steps to comply with the directives in the above-referred notice and is committed to work with the DFSA in its ongoing investigation and to promptly remediate and address the DFSA concerns at the earliest," said the company in a statement.
A look at what the case is all about
The latest action comes in the backdrop of a two-year-old controversy over alleged mis-selling of high-risk Credit Suisse additional tier-1 (AT1) bonds. Investors had accused the bank of pushing the products through its UAE operations, which included advisory from DIFC officials, relationship management by staff at its Dubai representative office, and account booking with its Bahrain branch.
Regulators began examining whether clients were properly onboarded in DIFC, a jurisdiction with separate financial rules and a stricter framework for “professional clients.” The AT1 bonds, written down in 2023 during Credit Suisse’s collapse, left several wealthy non-resident Indian investors with heavy losses and facing margin calls on leveraged positions.
According to the notice, the DIFC branch has been prohibited from engaging in financial services for new clients, including advising on financial products, arranging deals in investments, arranging credit, and providing custody services. The branch has been also barred from making financial promotions to new clients.
The restrictions, however, do not impact existing customers or clients who were previously offered financial services but had not yet been onboarded. The DFSA order will remain effective until it is amended or revoked in writing.
The regulator highlighted concerns regarding the branch’s practices around financial services provided to customers not fully onboarded and issues linked to its onboarding process.
HDFC Bank clarified that the DIFC branch operations are not material to its overall business and financial position. As of September 23, the branch had 1,489 customers, including joint account holders.
"The bank has already initiated necessary steps to comply with the directives in the above-referred notice and is committed to work with the DFSA in its ongoing investigation and to promptly remediate and address the DFSA concerns at the earliest," said the company in a statement.
A look at what the case is all about
The latest action comes in the backdrop of a two-year-old controversy over alleged mis-selling of high-risk Credit Suisse additional tier-1 (AT1) bonds. Investors had accused the bank of pushing the products through its UAE operations, which included advisory from DIFC officials, relationship management by staff at its Dubai representative office, and account booking with its Bahrain branch.
Regulators began examining whether clients were properly onboarded in DIFC, a jurisdiction with separate financial rules and a stricter framework for “professional clients.” The AT1 bonds, written down in 2023 during Credit Suisse’s collapse, left several wealthy non-resident Indian investors with heavy losses and facing margin calls on leveraged positions.
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