Indian SMEs, seeking global markets through the UAE, frequently misjudge the extent of the nation's banking and compliance changes. Despite UAE company formation looking easy, dealing with its finances needs significant planning and openness. Brijesh Mishra, DiamondRock's founder and a former banker with over 25 years of experience, discusses common mistakes Indian SMEs make when entering closely scrutinized banking ecosystems like Dubai's. Edited excerpts.
Economic Times (ET): You have spent over two decades inside Dubai’s banking system. What is the biggest misconception Indian SMEs have about entering the UAE market today?
Brijesh Mishra (BM): The biggest misconception is that once a company is set up in the UAE, banking will automatically fall into place. Many Indian SMEs believe the license is the hard part, when in reality, banking is where the real evaluation begins. Banks today look far beyond registration documents. They assess the promoter’s background, the source of funds, the clarity of the business model, and the intent behind the structure. Dubai welcomes businesses, but only those that are well prepared and transparent from the start.
ET: The UAE is often seen as an easy place to set up a company. How has the regulatory and banking environment changed in recent years?
BM: Over the past few years, the UAE has significantly strengthened its regulatory and compliance framework. Banking processes are now closely aligned with global AML and KYC standards. Banks are under constant scrutiny from international regulators and correspondent banking partners, which has led to deeper due diligence and longer onboarding timelines. While company formation may still appear simple, banking has become far more structured and risk focused.
ET: From a banker’s lens, what are the first red flags that can complicate a company’s bank account opening process?
BM: The first red flags usually appear when there is a lack of clarity around the business activity. This includes vague descriptions of operations, inconsistencies between the license and actual business plans, unclear source of funds, and unrealistic revenue expectations. Another concern is when founders are unable to clearly explain how funds will move through the account. Incomplete or generic documentation also raises questions very early in the process.
ET: How important is business clarity and documentation when Indian entrepreneurs approach UAE banks?
BM: Business clarity and documentation are critical. Banks are not just checking forms; they are evaluating the credibility of the business. Entrepreneurs must clearly explain what the company does, who the customers are, where revenue will come from, and how transactions will be executed. Well prepared documentation shows seriousness and builds trust, which is essential in the UAE banking environment.
ET: Many founders are surprised by compliance-related delays. What does transparency really mean in practical banking terms?
BM: Transparency means being open, consistent, and accurate in all disclosures. It involves clearly explaining the business background, financial history, expected transaction volumes, and geographic exposure. Banks are not looking for perfect profiles, but they expect honesty and consistency. Delays often occur when information is shared in fragments or when details change during the onboarding process.
ET: Why do some perfectly legitimate businesses still struggle to open or retain bank accounts in the UAE?
BM: Legitimacy alone is not enough. A business may be legally registered, but still fall into a higher risk category based on its sector, transaction patterns, or jurisdictions involved. In addition, many companies treat banking as a one-time requirement rather than an ongoing relationship. Banks expect regular updates, consistent activity, and continued compliance. When this is missing, even genuine businesses can face difficulties.
ET: How closely do banks today monitor transactions and ongoing account activity, and what should SMEs be prepared for?
BM: Banks monitor accounts on an ongoing basis using both internal reviews and automated systems. They track transaction behaviour, counterparties, frequency, and any deviations from the original declared activity. SMEs should be prepared for periodic reviews and clarification requests. If actual business activity aligns with what was presented at the time of onboarding, monitoring remains smooth.
ET: In your experience, what early structuring mistakes create long-term risks for businesses operating in the UAE?
BM: One of the most common mistakes is choosing a structure based purely on speed or cost rather than long-term compliance and banking comfort. Another issue is appointing shareholders or directors without considering how banks will assess them. Poor early structuring can restrict banking options, limit scalability, and create compliance challenges that are difficult to fix later.
ET: How should Indian SMEs think about choosing between mainland, free zone, or other structures from a compliance perspective?
BM: The decision should be based on the business model and long-term plans rather than assumptions. Free zones work well for certain activities, provided there is clear operational substance. Mainland structures offer broader access to the local market, but come with different regulatory responsibilities. From a banking perspective, what matters most is clarity, consistency, and alignment between structure and actual operations.
ET: Beyond tax efficiency, what real strategic advantages does the UAE offer Indian SMEs looking to expand globally?
BM: The UAE offers regulatory stability, strong banking infrastructure, global connectivity, and ease of cross-border operations. Its geographic position makes it a natural hub linking India, the Middle East, Africa, and Europe. Businesses that operate compliantly in the UAE also gain international credibility, which helps with partnerships, financing, and global expansion.
ET: For Indian SMEs planning UAE expansion in the next 6 to 12 months, what are the three non-negotiables they must get right from day one?
BM: First, they must have complete clarity on their business model and documentation. Second, they need to choose the right structure that supports long-term compliance and growth. Third, they should approach banking strategically, with preparation and patience. When these three elements are aligned, the UAE becomes a strong and sustainable platform for expansion.
Economic Times (ET): You have spent over two decades inside Dubai’s banking system. What is the biggest misconception Indian SMEs have about entering the UAE market today?
Brijesh Mishra (BM): The biggest misconception is that once a company is set up in the UAE, banking will automatically fall into place. Many Indian SMEs believe the license is the hard part, when in reality, banking is where the real evaluation begins. Banks today look far beyond registration documents. They assess the promoter’s background, the source of funds, the clarity of the business model, and the intent behind the structure. Dubai welcomes businesses, but only those that are well prepared and transparent from the start.
ET: The UAE is often seen as an easy place to set up a company. How has the regulatory and banking environment changed in recent years?
BM: Over the past few years, the UAE has significantly strengthened its regulatory and compliance framework. Banking processes are now closely aligned with global AML and KYC standards. Banks are under constant scrutiny from international regulators and correspondent banking partners, which has led to deeper due diligence and longer onboarding timelines. While company formation may still appear simple, banking has become far more structured and risk focused.
ET: From a banker’s lens, what are the first red flags that can complicate a company’s bank account opening process?
BM: The first red flags usually appear when there is a lack of clarity around the business activity. This includes vague descriptions of operations, inconsistencies between the license and actual business plans, unclear source of funds, and unrealistic revenue expectations. Another concern is when founders are unable to clearly explain how funds will move through the account. Incomplete or generic documentation also raises questions very early in the process.
ET: How important is business clarity and documentation when Indian entrepreneurs approach UAE banks?
BM: Business clarity and documentation are critical. Banks are not just checking forms; they are evaluating the credibility of the business. Entrepreneurs must clearly explain what the company does, who the customers are, where revenue will come from, and how transactions will be executed. Well prepared documentation shows seriousness and builds trust, which is essential in the UAE banking environment.
ET: Many founders are surprised by compliance-related delays. What does transparency really mean in practical banking terms?
BM: Transparency means being open, consistent, and accurate in all disclosures. It involves clearly explaining the business background, financial history, expected transaction volumes, and geographic exposure. Banks are not looking for perfect profiles, but they expect honesty and consistency. Delays often occur when information is shared in fragments or when details change during the onboarding process.
ET: Why do some perfectly legitimate businesses still struggle to open or retain bank accounts in the UAE?
BM: Legitimacy alone is not enough. A business may be legally registered, but still fall into a higher risk category based on its sector, transaction patterns, or jurisdictions involved. In addition, many companies treat banking as a one-time requirement rather than an ongoing relationship. Banks expect regular updates, consistent activity, and continued compliance. When this is missing, even genuine businesses can face difficulties.
ET: How closely do banks today monitor transactions and ongoing account activity, and what should SMEs be prepared for?
BM: Banks monitor accounts on an ongoing basis using both internal reviews and automated systems. They track transaction behaviour, counterparties, frequency, and any deviations from the original declared activity. SMEs should be prepared for periodic reviews and clarification requests. If actual business activity aligns with what was presented at the time of onboarding, monitoring remains smooth.
ET: In your experience, what early structuring mistakes create long-term risks for businesses operating in the UAE?
BM: One of the most common mistakes is choosing a structure based purely on speed or cost rather than long-term compliance and banking comfort. Another issue is appointing shareholders or directors without considering how banks will assess them. Poor early structuring can restrict banking options, limit scalability, and create compliance challenges that are difficult to fix later.
ET: How should Indian SMEs think about choosing between mainland, free zone, or other structures from a compliance perspective?
BM: The decision should be based on the business model and long-term plans rather than assumptions. Free zones work well for certain activities, provided there is clear operational substance. Mainland structures offer broader access to the local market, but come with different regulatory responsibilities. From a banking perspective, what matters most is clarity, consistency, and alignment between structure and actual operations.
ET: Beyond tax efficiency, what real strategic advantages does the UAE offer Indian SMEs looking to expand globally?
BM: The UAE offers regulatory stability, strong banking infrastructure, global connectivity, and ease of cross-border operations. Its geographic position makes it a natural hub linking India, the Middle East, Africa, and Europe. Businesses that operate compliantly in the UAE also gain international credibility, which helps with partnerships, financing, and global expansion.
ET: For Indian SMEs planning UAE expansion in the next 6 to 12 months, what are the three non-negotiables they must get right from day one?
BM: First, they must have complete clarity on their business model and documentation. Second, they need to choose the right structure that supports long-term compliance and growth. Third, they should approach banking strategically, with preparation and patience. When these three elements are aligned, the UAE becomes a strong and sustainable platform for expansion.
