Regulatory Action Follows HDFC Bank's DIFC Client Onboarding Concerns

HDFC Bank Terminates Three Employees Over DIFC Onboarding Lapses After Chairman’s Resignation​

Action Taken Following Dubai Branch Compliance Issues​

New Delhi, March 21: Days after the resignation of HDFC Bank Chairman Atanu Chakraborty over ethical concerns, the bank has terminated three employees in connection with lapses in client onboarding at its Dubai International Financial Centre (DIFC) branch.

According to sources, the action involves three senior executives and is linked to alleged mis-selling of Credit Suisse’s additional tier-1 (AT-1) bonds.

Regulatory Scrutiny and Business Restrictions​

The issue had already drawn regulatory attention. Following allegations of mis-selling, the Dubai Financial Services Authority barred HDFC Bank from onboarding new customers at its DIFC branch in September last year.

In an official statement, the bank confirmed that it had identified gaps in client onboarding processes at the UAE branch and completed a detailed internal review.

“Appropriate remedial actions have been taken in line with internal policies. Personnel changes have been undertaken along with appropriate action as per the bank's conduct regulation,” the bank said.

HDFC Bank added that it continues to operate with established governance frameworks and remains committed to maintaining high standards of compliance and regulatory adherence.

Chairman Atanu Chakraborty Resigns Mid-Term​

The development comes shortly after Atanu Chakraborty stepped down as chairman, effective March 18, citing ethical concerns.

In his resignation letter dated March 17, Chakraborty stated that certain practices within the bank over the past two years were not aligned with his personal values and ethics.

“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,” he wrote.

He clarified that there were no other material reasons behind his decision.

First Mid-Term Exit Raises Governance Concerns​

Chakraborty’s resignation marks the first instance of a part-time chairman exiting HDFC Bank before completing the term, raising concerns about governance within the country’s second-largest lender.

He was appointed as part-time chairman on May 5, 2021, following his retirement as Secretary of the Department of Economic Affairs. His tenure had been extended in 2024 for another three years until May 4, 2027.

A 1985-batch IAS officer of the Gujarat cadre, Chakraborty previously served as Secretary of the Department of Investment and Public Asset Management under the finance ministry.

Background: HDFC Merger and Institutional Scale​

Chakraborty took over as chairman during a crucial phase that included the reverse merger of HDFC Bank with its parent entity, HDFC Limited.

The merger became effective on July 1, 2023, creating a combined entity with a balance sheet exceeding Rs 18 lakh crore, making it one of the largest financial institutions in the country.