One thing that's important to realize about "Indian Food" in both the US and UK are disproportionately run not just by Bangladeshi people, but by people from a very specific region of Bangladesh: Sylhet. Sylhet is not very famous for its food but what it did have is lots of sailors. These sailors became the founders of curry houses in London and then, through ethnic chain migration and the creation of an ethnic economic niche, immigrants from this region came to dominate the Indian restaurant industry in first the UK and then the US. See Lizze Collingham's Curry: A Tale of Cooks and Conquerors. This ethnic economy is important because many restaurants are recruiting their staff—from cooks to busboys—through an "ethnic economy", as many sociologists call it. It's the same reason that so many Chinese restaurants have been disproportionately run by first by Cantonese people, then Taiwanese people, and more recently Fujianese people. Restaurants are often staffed people the owner knows, or people who the owner shares a connection with, and many times people will be recruited from the owner's or existing employee's home areas. These people then work their way up in the restaurant and may go to found their own restaurants later with this training and then use their own social capital (connections, people they know) to staff their new restaurant.

I don't have a quote about New York in particular, but this is the way it was in London and Sylhetis, but this is the way it was in London and we see pretty explicitly that the London Sylheti model was copied directly into New York (Collingham quotes one visitor as recalling his first visit to Indian restaurants in New York in 1958, "It seemed as if the menus from flock-wallpapered restaurants in England had been xeroxed and sent to proprietors here.). Here's how she described the system of London:

These pioneering Indian restaurants all employed ex-seamen in their kitchens and an extremely high proportion of these Syhletis [sic—for some reason Collingham consistently spells Sylhet and Syhlet] living in Britain in the 1940's and 1950's work in them at one time or another. It was the ambition of many of the seamen to set up restaurants of their own and "The Kohinoor [restaurant]... was the main training centre for many Bangladeshis for [a] long time. All the Bahadur brothers were kind hearted, they never took advantage of the poverty of their employees and always treated them well. Nearly all first generation Bangladeshis who owned Indian restaurants in the UK in the early days, learnt their trade from the Bahdaur brothers. They learnt the skill of cooking and serving, also management, step by step. Even those who worked for Veeraswamy's restaurant or other Indian restaurants also came to Bahadaur at last to have their final training."

There is now some increase in diversity in Indian cuisine in New York, but as recently as 2000 someone was estimating to the New York Times, "I'd say 95 percent of New York's Indian restaurants belong to Bangladeshis." (Collingham quotes heavily from this article, incidentally.) The article goes on to list on well known "Indian" establishments and point out that they're mostly owned by Bangladeshis and most of these Bangladeshis come from Sylhet. As for why they market themselves as "Indian" despite being not, the NYT article mentions:

For the Bangladeshi immigrants who came to New York for a fresh start, the choice of names was both a matter of marketing and a bit of insecurity. Among the nations encompassed in the vast Indian subcontinent, only India became the stuff of romance: the pink palaces, the Taj Mahal, the caparisoned elephants. As for Afghanistan, Pakistan and Bangladesh, their images became negative ones: wars, unbelievable natural catastrophes, poverty on a grand scale. Bangladeshis remember with pain how long they were known as Asia's ''basket case.''

The thing that I would add to this is that, as Collingham's book points out, this branding began in London in the 1910's—long before Bengal was divided, long before Partition, long before "Bangladeshi"/"Muslim Bengali" wasn't part of a greater "India". She emphasizes that from the start these restaurants were catering not to customers expecting Indian cuisine, but specifically *Anglo-*Indian cuisine, mainly Northern Indian cuisine adjusted to the palates of British ruling class that loved meat and was wary of anything overly spiced. The New York Times article says, and I think Collingham agrees, that these Sylhetis began exporting this model that was so successful in London and then all of the UK to New York and the rest of the US in the 1970's. Now, these Bangladeshi's from South Asia's marshy far east have not only adopted traditional North India cooking, but these these (Muslim) Bangladeshis specifically try to evoke an image of (Hindu) India with their names, decor, and artwork. Sylheti cooking is heavy on rice (rather than bread, as in Northern Indian cooking) and fish (rather than meat or vegetarian dishes—Bangladeshi is mostly covered by the Ganges delta), but Sylheti and Bangladeshi cooks in diaspora have tended to adopt what their customers expect: a Northern Indian core cuisine with various regional dishes offered as secondary options. Speaking of meeting expectations, one issue that South Asian restaurants traditionally had was that many Hindus from North India didn't eat meat, and American and British costumers have always expected larger portions of meat supplemented by vegetarian dishes, rather than putting vegetables at the center.

The NYT article mentions that in the 90's you do begin to see other, more regionally focused and specialized South Asian restaurants open (Tamil, Punjabi, purely vegetarian, and even explicitly Bengali), but the scene even a decade after Seinfeld was still dominated Bangladeshis cooking Northern Indian food, as it probably still mostly is today.

When Jerry said "how bad can it be" shouldn't he have known better??? In "The Jacket" the previous season Elaine's Father took them all to "that Pakistani restaurant on 46th Street" and jokes to Jerry and George about how spicy the food is. Continuity error in the writer's room or was Jerry being disingenuous to Babu?!