HDFC Bank DIFC branch terminates three staff after UAE client-onboarding review

HDFC Bank has ended the services of three employees after finding gaps in client onboarding at its Dubai International Financial Centre (DIFC) branch. Sources said three senior executives were removed over alleged mis-selling of Credit Suisse additional tier-1 (AT-1) bonds. The action came days after chairman Atanu Chakraborty resigned, citing ethical concerns.

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The alleged mis-selling issue earlier drew action from the Dubai Financial Services Authority. The regulator barred HDFC Bank from onboarding new customers at its DIFC branch in September. The restriction followed the allegations linked to the Credit Suisse AT-1 bonds sold to clients through the branch.

HDFC Bank DIFC branch client onboarding gaps

HDFC Bank said it reviewed the DIFC matter and found shortcomings in client-onboarding requirements in the United Arab Emirates (UAE). The bank said it completed a detailed and objective review. It said it took remedial steps under internal rules. It also confirmed personnel changes under the bank’s conduct regulation.

The bank added that its governance frameworks remain in place. HDFC Bank said it stayed committed to high standards of compliance and regulatory adherence. The statement did not name the employees who were removed. The bank also did not give details of the specific gaps found at the DIFC branch.

HDFC Bank chairman Atanu Chakraborty resignation letter

Chakraborty resigned as chairman of the country’s second-biggest lender, effective March 18. The resignation was described as abrupt and linked to ethical concerns. This marked the first time a part-time chairman of HDFC Bank left before completing the term. The exit raised questions about internal functioning.

"Certain happenings and practices within the bank, that I have observed over last two years, are not in congruence with my personal values and ethics. This is the basis of my aforementioned decision,\" Chakraborty said in the resignation letter dated March 17.

The letter was addressed to the chairman of the Goverance, Nomination, Remuneration Committee, H K Bhanwala. Chakraborty also wrote, \"there are no other material reasons for my resignation other than those stated above.\" The letter did not mention the Dubai branch matter or any specific internal events.

HDFC Bank chairman Atanu Chakraborty tenure and background

Chakraborty was appointed part-time chairman effective May 5, 2021. The appointment came nearly a year after retirement as economic affairs secretary. In 2024, the term was extended by three years. The extended tenure was set to run until May 4, 2027, before the resignation took effect.

Chakraborty is a 1985-batch IAS officer of the Gujarat cadre. Chakraborty retired as secretary of the Department of Economic Affairs in April 2020. Before that role, Chakraborty served as secretary of the Department of Investment and Public Asset Management (DIPAM). Both departments operate under the finance ministry.

Chakraborty became chairman during the reverse merger of HDFC Bank with parent HDFC Limited. The merger of HDFC Limited with HDFC Bank became effective on July 1, 2023. The combined entity had a balance sheet of more than Rs 18 lakh crore. The merger created one of India’s largest financial groups.

The bank’s latest action focused on process gaps and staff accountability at the DIFC branch. Separately, Chakraborty’s resignation cited ethical differences based on observations over two years. HDFC Bank said it has taken remedial measures and personnel actions under internal rules. The Dubai regulator’s earlier onboarding bar remains a key backdrop.

With inputs from PTI