Without naming PNB or the main accused in the multi-crore PNB fraud case Nirav Modi, Jaitley said bank management did not live up to their task as it failed to detect the delinquent.
They (the bank management) were also found lacking in being able to check who amongst them were the delinquents," Jaitley said.
The Finance Minister said the state will chase down whosoever cheats the banking system.
"With regard to lack of ethics that a faction of Indian business follows, it is incumbent on us as a state, till the last legitimate capacity of the state, chase these people to the last possible conclusion to make sure that the country is not cheated," IANS quoted Jaitley as saying.
He said supervisory agencies should ensure that stray cases are nipped in the bud and they are never repeated.
"And, of course, there is also an important challenge where the supervisory agencies have now to introspect what are the additional mechanisms they have to put in place to make sure that stray cases don't become a pattern and it is nipped in the bud," Jaitley said.
Nirav Modi case: How PNB was defrauded of Rs 11,500 crore
Punjab National Bank had rocked the financial world last week with the revelation that it had detected "fraudulent and unauthorised transactions" worth 11,500 crore at one of its branches in Mumbai.
The fraudulent transactions are reportedly linked to billionaire diamond merchant Nirav Modi, against whom the bank had filed a complaint with the CBI last month.
Nirav Modi was initially charged last month with causing a wrongful loss of Rs 280.70 crore to PNB in 2017 after hatching a conspiracy with two bank officials to defraud the bank.
The other partners who were allegedly involved in fraudulent transactions were Nirav's wife Ami, brother Neeshal and maternal uncle Mehul Choksi, who owns Gitanjali Gems.
On Wednesday, PNB filed two more complaints against Modi after it realised that the fraud could involve at least Rs 11,500 crore of its money.
The estimated scale of the fraud of Rs 11,500 crore is more than eight times PNB's net profit of Rs 1,325 crore in the financial year ended March 2017. The crisis could impact the bank's profitability this year.
Nirav had left India on January 1, and is believed to be in Switzerland. Nirav's wife Ami, a US citizen, and business partner Mehul Choksi departed on January 6.