Today's Edition
ALLAN JACOB (DUBAI)
The Dubai Financial Services Authority (DFSA) has restricted certain financial services, including signing up new clients, by a leading Indian bank operating out of its Dubai International Financial Centre (DIFC) branch. The bank’s branch has also been prohibited from selling new financial products to customers.
India’s HDFC Bank, in a letter to the Bombay Stock Exchange and National Stock Exchange, confirmed it had received a notice from the Dubai financial regulator that ordered the ban on some of its services at DIFC branch.
According to the order received by the lender, the regulator banned its DIFC branch from “soliciting or conducting business” with new clients for financial services.
The ban covers “financial products, arranging deals in investments, arranging credit, and advising on credit along with arranging custody.”
HDFC’s DIFC branch has also been prohibited from soliciting, onboarding, or engaging in financial promotions with new clients.
The Indian bank said it is taking measures to comply with the directives, and will work with the regulator during the probe into its activities.
In the disclosure to Indian stock exchanges, HDFC said, “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.”
The bank, however, added that the DIFC branch’s business would not impact overall operations or its financial position.
“The business undertaken at the DIFC branch is not material to the bank’s operations or its financial position and accordingly no material impact/ implications are expected with respect to the overall operations or financial position of the bank,” the statement said.
HDFC’s DIFC branch has 1,489 customers, including joint holders, as of September 23.
The DFSA enforced the punitive measures after the branch “carried on with financial services by arranging/ advising on financial products/ credit for customers who were not onboarded by the DIFC branch; issues with onboarding of customers at the DIFC branch, and other matters.”
The curbs come after allegations centred on the alleged mis-selling of high-risk Credit Suisse additional tier-1 (AT1) bonds. Investors had accused the bank of promoting these instruments through its UAE network. The process reportedly involved advisory services from officials at the DIFC, relationship management by staff at its Dubai representative office, and booking of accounts through the Bahrain branch, according to a report by The Economic Times.
HDFC bank has 9,499 branches and 21,251 ATMs across 4,153 cities and towns in India. The bank has four branches in Hong Kong, Bahrain, Dubai and an IFSC Banking Unit (IBU) in Gujarat International Finance Tech City. It has five representative offices in Kenya, Abu Dhabi, Dubai, London and Singapore.
