Participating in the sixth meeting of interior and home ministers of SAARC countries in Kathmandu, Rajnath Singh said terrorism was a major issue of concern for the region.
"This is driven by internal, regional as well as international factors. Further, groups with radical and extremist ideologies pose threats across national boundaries in the volatile security environment," he said.
Rajnath Singh also expressed concern about the new threats of extremism and violence emerging in the region.
He said the Indian government was committed to securing justice for the families of the victims of terrorist strikes, including the November 2008 Mumbai terror attack.
The Indian minister said India was carefully assessing the impact of the withdrawal of foreign forces from Afghanistan on the entire south Asian region.
Rajnath Singh referred to the problems faced by India, particularly the northern state of Punjab, due to smuggling of drugs. He called for steps to deal with money laundering, terrorist funding, cyber crimes, human trafficking and illegal movement of arms across boundaries.
He said India was also concerned about "increasing circulation of counterfeit currency in its neighbourhood".
The minister said menaces such as terrorism and drug trafficking can be best fought if experiences were shared at the operational level.
He proposed establishing the SAARC (South Asian Association for Regional Cooperation) centre for good governance where officers from all member countries can come together to exchange their experiences on good governance.
He said the meeting of ministers from SAARC countries provided an opportunity to forge cooperation within the region against terrorism in particular and organised crime in general.
Rajnath Singh emphasised the commitment of India's Narendra Modi-led government for giving primacy to improving India's relations with all SAARC neighbours.
Interior ministers from SAARC countries participated in the meeting.