In a significant regulatory development, the Dubai Financial Services Authority (DFSA) has issued a directive barring HDFC Bank's Dubai International Financial Centre (DIFC) branch from onboarding new clients. This decision, effective from September 26, 2025, comes amid ongoing scrutiny of the bank's compliance with UAE's financial regulations.

The DFSA's action prohibits the DIFC branch from engaging in various financial services activities for new clients, including advising on financial products, arranging investment deals, providing credit services, and offering custody services. Additionally, the branch is restricted from conducting financial promotions targeting new clients.

Existing clients of the DIFC branch will continue to receive services, and those who had previously received financial services but were not formally onboarded may still be accommodated.

The DFSA's decision follows concerns over HDFC Bank's onboarding practices, particularly regarding the provision of financial services to clients who were not properly onboarded. The regulator cited deficiencies in the bank's procedures, including instances where services were extended to customers before the required onboarding process was completed.

In response to the DFSA's directive, HDFC Bank has stated that the DIFC branch's operations are not material to the bank's overall business or financial position. As of September 23, 2025, the branch had 1,489 customers, including joint account holders. The bank has emphasized that it is committed to addressing the DFSA's concerns and has already initiated necessary steps to comply with the regulator's directives.

The DFSA's restrictions will remain in effect until the authority issues an amendment or revocation in writing. This development underscores the importance of stringent compliance with regulatory standards in the UAE's financial sector and serves as a reminder to financial institutions operating in the region to adhere to established onboarding and service procedures.