New Delhi: There is no second wave of bad loans, though some unexpected cases have come up, said SS Mallikarjuna Rao, new managing director of the Punjab National Bank (PNB) that is prepping itself to amalgamate with two other state-run banks.There is also a turnaround in the sentiment and demand is coming back in the retail segment, Rao told ET in an interview, adding that the improvement will reflect in the data with a lag. The destressing of the NBFC sector is providing impetus to the retail sector.On the concerns over new nonperforming assets (NPAs), Rao said it can be bifurcated into two parts. “As far as the large corporate and direct lending segment is concerned, we can say almost it ( NPA situation) has bottomed out,” he said, adding that there may be some stress in smaller segments such as agriculture.Banks have started receiving shocks from unexpected quarters, he said, mentioning IL&FS, DHFL and more recently HDIL and Altico cases. “Though, DHFL has not defaulted till date, but a default at a later date is not ruled out completely. Our exposure is around Rs 1,800-2,000 crore. Aadhar Housing is not a problem at this point in time. HDIL is not going to impact all the banks, it’s restricted to PMC Bank ,” he said, pointing out the troubled cases.PNB chief said faster resolution of NCLT cases should also provide some balancing through a good amount of write-back of provisions. The bank is confident of bringing down net NPAs to below 6%.A reasonable majority of the nonbanking financial companies (NBFCs) are in a better shape if you compare their position in October-November 2018, Rao said, adding this is a good indication for the such firms to move into lending.“If you look at a yearon-year basis, lending from the public sector banking is Rs 175,000 crore to NBFC, but the entire money has not gone into relending to the markets, reason being their balance sheet,” Rao said, adding percolation is taking place.“What we have seen in the ecommerce in festive sales is a good sign,” he said. Ecommerce majors Flipkart and Amazon reported 33% higher sales in their recent online shopping festivals.“We are also seeing the demand coming to banks for that retail lending though comparison cannot be very huge at this point, but momentum seems to be there,” the banker said. He expects the corporate tax cuts to also provide impetus to the economy, which slowed to a six-year low of 5% in April-June quarter.Second half of the current financial year would be better in terms of retail lending.For the banking sector as a whole, credit has grown 11% year-on-year but Rao admitted that in some segments which needed credit, the delivery may not have been much.From October 1, repo-linked advances in terms of retail and micro, small and medium enterprises (MSMEs) is done by all banks, as a result, transmission is automatic. Rates will be reduced by 25 basis points automatically after the RBI rate cut. “That is the segment where the pain is felt more,” said Rao. In corporate segment, with respect to reduction of MCLR based on repo rate, bank will take a call at the end of the month.He said while banks are cutting lending rates, they were not able to get the reduction in the liability. “RBI should aggressively also think of allowing the deposit rates to be dynamic, variable,” he said.In terms of PNB’s performance, the bank MD said credit growth has been flat in the first half but bank would do much better in the second half for an overall 10% credit growth. He said the response to district-wise outreach has been good. “The first objective is to create a positive environment.”The bank has received Rs 16,000 crore in capital. “We will be able to handle the adhering requirement and also the net NPA. Though considering the current events it would be a challenge, but we will work towards keeping net NPAs at 6%,” Rao added.Bank has already started pre-merger activity. PNB will merge United Bank of India and Oriental Bank of Commerce with itself. He asserted that no jobs will be lost even though they are in the process of reviewing branch spread.