HDFC Bank Faces Action in UAE Over Mis-Selling of Risky Credit Suisse Bonds

HDFC Bank, India’s most valuable lender, is under the scanner in the United Arab Emirates for allegedly mis-selling risky bonds linked to the now-troubled Credit Suisse. The controversy has resurfaced as regulators probe possible violations of licensing conditions across multiple jurisdictions, including the UAE, Bahrain, and the Dubai International Financial Centre (DIFC).

What are Credit Suisse Additional Tier-1 (AT-1) Bonds?

These bonds are a type of high-risk investment issued by banks to raise capital. These bonds are different from regular bonds because they do not guarantee repayment like normal loans. In some situations—such as when a bank is in financial trouble—these bonds can be written off entirely or converted into shares, meaning investors may lose all their money. 

Investor Complaints Spark Investigation

The case gained momentum after investors lodged complaints, claiming they were not adequately informed about the risks associated with the Credit Suisse Additional Tier-1 (AT-1) bonds. These high-risk instruments suffered massive losses after the Swiss bank's crisis, leaving many investors blindsided. 

The complaints have raised questions over whether HDFC Bank followed proper onboarding and advisory procedures when dealing with clients across its international branches.

A Complex Web of Operations

A key concern for regulators lies in how HDFC Bank managed its operations across different legal jurisdictions. Some customers were approached by relationship managers based in the UAE, given investment advice through officials from the DIFC, and had their accounts booked with HDFC's Bahrain branch. 

The Dubai International Financial Centre (DIFC) is a designated financial free zone within Dubai that operates under its own independent legal and regulatory framework. Unlike the rest of the UAE, DIFC follows a common law system and has its own civil and commercial laws. Financial activities within DIFC are supervised by the Dubai Financial Services Authority (DFSA), which functions as an independent regulatory body. 

Customer Lodges Police Complaint

Adding to HDFC’s troubles, a long-time customer, Pankaj Sinha, filed a police complaint in Gurugram. Sinha, who heads the Sri Lankan division of a global FMCG brand, alleged that HDFC Bank staff misled him into buying AT-1 bonds of foreign banks, including Credit Suisse, without explaining the risk. He claimed the sales pitch lacked transparency and accused bank officials of colluding in the mis-selling.

HDFC Bank Share Price Today

Following the news on Thursday, May 29, 2025, 13.09 P.M. HDFC Bank share price fell 0.51% to ₹1913.80 on the NSE, down from the previous close of ₹1923.50. The company's market capitalisation reached ₹14,64,756 crore. The stock had touched a 52-week low of ₹1454.00 and a 52-week high of ₹1978.90.

Conclusion

This isn’t the first instance of AT-1 bond controversy. In India, investors are still fighting a legal battle over Yes Bank’s 2020 decision to write off ₹8,500 crore worth of similar bonds. The HDFC case now highlights how cross-border financial dealings can complicate compliance—and lead to serious reputational risks. The ongoing regulatory review in the UAE could have wider implications for how Indian banks operate abroad.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. This does not constitute a personal recommendation/investment advice. It does not aim to influence any individual or entity to make investment decisions. Recipients should conduct their own research and assessments to form an independent opinion about investment decisions.