Indians join in the branch challenge to the Big Four

By RICHARD DYSON
Updated: 15:39 EST, 26 February 2011

State Bank of India is the latest of several new lenders to expand their UK branch networks.

Last week it opened its fourth branch in the capital, in East Ham, east London, and plans more in Wolverhampton and Coventry. It already has branches in Leicester, Birmingham and Manchester.

State Bank, 60 per cent-owned by the Indian government, is fully authorised in Britain, which means deposits are covered up to the standard £85,000 for each account under the Financial Services Compensation Scheme.

Step forward: Vinod Kumar is likely to use SBI's remittance service as he has family in New Delhi

It joins new banks such as US-owned Metro and ICICI, also Indian, which are also opening UK branches. In contrast, traditional High Street banks, particularly Barclays and HSBC, are closing many of theirs.

As with ICICI, State Bank's branches are focused on areas where there is a big Asian population. But both banks have penetrated a wider market with competitive internet savings accounts.

State Bank's instant-access account pays two per cent on savings from £500 while its five-year bond (minimum £1,000) pays 4.5 per cent. Indian banks are historically committed to branch outlets and in its home market State Bank has a staggering 20,000 branches.

By comparison, Britain's entire bank and building society branch network numbers under 10,000 and has almost halved since 1990.

Deepak Ahuja, head of consumer banking at State Bank, says: 'You can transact online, but if any customer ever phones the bank they will be phoning a branch.'

Customers fed up with the High Street banks' poor service have been quick to sign up with new entrants such as State Bank, ICICI and Metro.

When Financial Mail attended State Bank's East Ham branch opening, one customer said: 'Two things have made me come here today - the inefficiency of UK banks and the fact you don't get any personal service.'

Vinod Kumar, who has managed a nearby shoe shop since 1998, said: 'It's fantastic for the neighbourhood and will help to revive the High Street.'

Vinod, 52, who banks with Barclays and HSBC, is likely to use SBI's remittance service as he has family in New Delhi.

ICICI has 11 branches, the Bank of Baroda ten, Metro Bank four (with five opening this year) and the Islamic Bank of Britain seven.