There is a lot of turmoil these days within the country's largest private bank, HDFC Bank. Taking a very strict step, the bank has fired its three top officials. This major action has been taken in the matter of adding foreign clients to the Dubai (DIFC) branch and alleged mis-selling of Credit Suisse AT1 bonds.
This entire controversy is related to the functioning of HDFC Bank's DIFC branch in Dubai. A detailed internal investigation of the bank has revealed that the established rules for onboarding foreign customers were flawed at many levels. It is alleged that some officials of the bank did not give correct information to the investors. The investigation also found that many investors were encouraged to transfer their foreign currency (FCNR) deposits held in India to Bahrain and from there invest in risky AT-1 bonds linked to Credit Suisse. When investors realized this mis-selling, they complained about it, after which the whole matter came out in the open.
In this serious matter, the bank has adopted a strict stance and dismissed three senior officers including Group Head of Branch Banking, Sampat Kumar. Apart from him, Executive Vice President of Middle East and Africa Harsh Gupta and Payal Mandhyayan have also been removed from the post. It is noteworthy that Gupta and Mandyan were suspended in January last year itself, when the bank started a thorough investigation into the matter. HDFC Bank has clarified in a statement that it has completed an impartial investigation into the matter and has taken necessary corrective steps as per its internal policies and conduct rules.
The roots of this controversy did not grow overnight. Last year, on September 27, 2025, the Dubai Financial Services Authority (DFSA) had banned the bank's Dubai branch from adding new customers and doing any new business. This action was taken because the bank was providing its services even to those customers who were not officially added to the system through the DIFC entity. Apart from this, serious shortcomings were also found in the investment advice and credit system.
In fact, the bank's 'cross-border operating model' itself had come under the scanner of regulators. Under this model, UAE relationship managers would interact with customers, investment advice would be provided from the DIFC entity and accounts would finally be opened in the Bahrain branch. This complex and complicated structure attracted the attention of the investigating agencies.
Recently, the bank's former chairman Atanu Chakraborty had also suddenly resigned citing "ethical" differences with the management, making the situation even more sensitive. However, the bank management says that their governance structure is very strong and they are fully committed to following the rules.
