HSBC has decided to rebuild its loan book after booking losses for three consecutive years in the commercial banking segment. The bank has plans to focus more on credit card and home loans owing to the improving credit picture in the country. The bank had reported 44% decline in profits last year.

The UK based bank is the third largest foreign bank in India in terms of assets. It aims to cash on lending mechanism which had almost come to a halt after the global economic meltdown.

HSBC was the foreign bank which was most badly hit by the slowdown. It had reported a loss of $219 million (about Rs 1,007 crore) on its consumer banking portfolio in 2009.

HSBC currently has a home loan book amounting to Rs. 100-150 crore every month. "Our focus for 2010 is to expand our mortgages business profitably," said Rajneesh Bahl, country head, personal financial services.

The bank had reduced its exposure on mortgages in India by 20% in the year 2009. The mortgage disbursal amount had reduced from from $ 1,112 million (Rs 5,115.2 crore) at the end of 2008 to to $883 million (Rs 4,061 crore) in 2009.

"There is no doubt the economy is looking up again and customer confidence is on the rise. As the market picks up, so does the demand for affordable housing; we believe the overall pie will get only bigger, which could result in an increased market share for all players," Bahl said.

The bank would be entering into the credit card segment in the next few months. The bank has already started sourcing credit cards from the open market from this week, bank sources say. The bank would only be serving specifuc requests for credit card till the consolidation phase continues.

"We never stopped open-market sourcing. For some time now, we have opted to grow selectively. We continue to offer cards to customers with a good profile and track record," said Bahl.

"Earlier, our thinking was that the HSBC credit card brand is strong and we should not dilute its value by co-branding. However, seeing the success of co-branded credit cards, we decided to introduce our own cards," said a senior executive at the bank.

The consumer banking segment of the bank was in woe even before the downturn. The bank reported a loss in retail banking worth $70 million in 2007. The loss widened to $155 million and $219 million in 2008 and 2009, respectively.

"The delinquencies in India began to moderate in the second half of 2009 as measures implemented by HSBC in the second half of 2008 to mitigate loan losses, including ceasing consumer finance loan origination and tightening lending criteria on other unsecured lending products, began to take effect," HSBC had said in its 2009 Annual Report.