The country's second-biggest state-owned bank in February accused two high-profile jewellers Nirav Modi and uncle Mehul Choksi of colluding with rogue bank employees to secure credit from overseas lenders using fraudulent guarantees between 2010 and 2017.
This has been dubbed as the biggest bank fraud in India's history, but the finance ministry told parliament that even before the fraud came to light, state banks lost a total of Rs 19,533 crore to 2,718 cases of fraud in the year that ended on March 31, 2017.
Punjab National Bank, better known as PNB, alone reported 158 cases of fraud in 2016/17, the ministry said. PNB did not immediately respond to a request for comment.
In monetary terms PNB was followed by Bank of India, which lost Rs 2,770 crore, and State Bank of India that lost Rs 2,420 crore, the ministry said.
The committee will also look into the role of auditors in checking frauds.
Reuters reported last month that India's state-run banks reported 8,670 "loan fraud" cases totalling Rs 61,260 crore over the last five financial years up to March 31, 2017.
A parliamentary committee on finance said in a report on Friday that it was "extremely concerned about the recent fraud detected in Punjab National Bank, which clearly reflects that a small group of individuals can manipulate such a gigantic bank and compromise it despite such well laid out norms, guidelines, checks and balances."