In the wake of the Rs.11,400 crore PNB scam, Union Finance Minister Arun Jaitley on Tuesday said banks have become cautious as many of them have been at the receiving end of their clients.

Delivering the inaugural address at the 3rd annual meeting of Asian Infrastructure Investment Bank (AIIB) here, Jaitley said: “Banks have become cautious due to some incidents in last few years as many of them have been at the receiving end of their clients.”

The statement comes days after Jaitley said that banks and auditors need to be more alert in detecting frauds as bank scams “push ease of doing business to background” while scarring the economy.

On February 14, state-owned Punjab National Bank (PNB) disclosed that it had unearthed fraudulent transactions worth Rs.11,400 crore at one its Brady House branch in Mumbai.

In a complaint to the Central Bureau of Investigation, the lender named firms and people associated with billionaire jeweller Nirav Modi to connived with some of its officials to defraud the bank using bank guarantees.

The fraud, which includes money-laundering among others, concerns the Firestar Diamonds group in which the CBI has booked Modi, his wife Ami, brother Nishal Modi and their uncle Mehul Choksi.

Jaitley further said that a single Goods and Services Tax (GST) rate can’t work at the moment and that the GST compliance was going to be made simpler.

He also reiterated that the country’s tax structure has become extremely investor friendly as the Centre has added predictability and stability as far as taxation is concerned.

“A 7-8 per cent growth rate is absolutely normal but the potential for scale of investment in India is huge,” he said.