HDFC Bank AT1 bond misselling case
The HDFC Bank AT1 bond misselling case (also referred to as the HDFC AT1 bond scandal) refers to allegations that staff at HDFC Bank's branches in the Dubai International Financial Centre and Bahrain missold high-risk US$100–120 million Additional Tier-1 (AT1) bonds issued by Credit Suisse to non-resident Indian clients. These bond instruments lost nearly all value when Swiss Financial M
Overview
The HDFC Bank AT1 bond misselling case (also referred to as the HDFC AT1 bond scandal) refers to allegations that staff at HDFC Bank's branches in the Dubai International Financial Centre and Bahrain missold high-risk US$100–120 million Additional Tier-1 (AT1) bonds issued by Credit Suisse to non-resident Indian clients. These bond instruments lost nearly all value when Swiss Financial Market Supervisory Authority wrote them down to zero in March 2023 during Credit Suisse's emergency acquisition by UBS.
Background
HDFC Bank's overseas operations in the United Arab Emirates and Bahrain primarily serve NRI clients, often managing foreign currency non-resident (FCNR) deposits. The employees at these overseas branches were reportedly offered AT1 bonds to those NRIs and presented it as safe, fixed-return investments similar to deposits, without full disclosure of their perpetual nature and write-down risks. These were allegedly marketed as high-yield (10–13%), capital-protected or fixed-maturity products. Some investors claimed they signed blank forms or received inadequate risk disclosures. Estimated exposure has been reported in the range of US$100–120 million (approximately ₹800–1,000 crore). AT1 bonds are hybrid capital instruments designed to absorb losses in times of stress. They are perpetual (or very long-dated), pay discretionary coupons, and can be written down or converted to equity if the issuer's capital ratio falls below a regulatory "point of non-viability" trigger. In March 2023, FINMA wrote down approximately US$17 billion of Credit Suisse AT1 bonds to zero as part of the bank's rescue by UBS, resulting in total losses for bondholders.
Investigation
The matter gained significant attention in 2025–2026 following customer complaints, regulatory scrutiny by the Dubai Financial Services Authority and debarment from onboarding new clients in Dubai branch. The DFSA found that the bank's Dubai International Financial Centre branch compliance and internal audit functions had been aware of lapses since at least 2020 but failed to escalate or remediate the issues for over five years. Later, an internal investigation by the Bank itself led to series of disciplinary actions against multiple executives, and the abrupt resignation of former part-time chairman Atanu Chakraborty in March 2026, who cited differences over "values and ethics." No major public enforcement actions by Indian regulators such as the Reserve Bank of India or Securities and Exchange Board of India have been prominently reported as of April 2026.
See also
Yes Bank AT1 bond controversy
Further reading
Nayak, Mahesh (16 April 2026). "HDFC Bank episode a personality-driven aberration". The Financial Express (India). Retrieved 18 April 2026. Moharkan, Furquan (24 July 2025). "HDFC Bank charged with ripping off NRI depositors. Now it is set to pay". The Morning Context. Retrieved 18 April 2026.
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