Indian immigrants in the US now have a much better chance of realising their American dream.
More and more banks run by Indians are opening in North America to cater to the new Indian immigrant, who finds it tough to get loans from mainstream American banks, which are struggling due to the sub-prime mortgage crisis.
At least seven Indian-American ethnic banks have opened in the past three years; there are about a dozen such banks in the US now.
“I expect about 10 more to open in five years,” State Bank of Texas founder Chandrakant Patel told the Hindustan Times.
Large mainstream banks are reluctant to hand out loans to newcomers to set up a business or buy a house. That’s where ethnic banks step in. After examining a customer’s repayment prospects, these banks issue loans quickly, though interest rates are often higher to cover the risk.
However, Sushil Patel, Patel’s son, said the Bank of Texas charges interest at market rate to people with no credit history. “Ethnic banks avoid bad loans as they take decisions based on factors like culture, background, social status.
They are able to judge a person's character better than regular American banks, who don't know their clients as well," explained Patel. "We are able to check the guy's character because of the close-knit Indian community in the US."
The richest among these banks, the Mutual Bank of Chicago, has assets worth $1.35 billion. It's 1,000 times smaller than Bank of America, the leading bank in the US.
Ethnic banking is even more popular among the Chinese - the community has over 60 banks in the US. The combined assets of Asian American banks, which includes Indian, Chinese and other communities, is $41 billion, a mere four per cent of Bank of America's. Little India, the American-Indian publication, said: "There is huge room to grow. The competition may intensify, but a huge market remains untapped."