"There are states within states. There are some countries dealing with that problem. And then I take a chance to say (as) the (state) leadership you do not have an option to allow this to continue within your institutions..Clean up! she said.
Rice was speaking at the Hindustan Times Leadership Summit here during a seminar on "USA and India: Building Stronger Ties".
She said it was the "goal" of the United States, in terms of the region, that if there are officials of any country working with or connected with a terrorist group, the state should take up the responsibility.
The US has "stepped in" at various junctures and after the 26/11 Mumbai terror attack, the issue was taken up with then Pakistan President Asif Ali Zardari, Rice said.
Noting that the US's war on Iraq was a "right decision" as it could not have allowed someone like Saddam Hussein to continue, Rice rued the US also made a few wrong decisions while rebuilding that war-torn country.
In rebuilding of Iraq, we have violated few principles. The problem was the tribes were natural and we made a mistake of not sharing (the responsibilities to rebuild Iraq) with others," she said.
On the breakthrough in nuclear deal with Iran, Rice said the danger with the deal was that country had all the capabilities of building a nuclear weapon and the "capping" was happening at a "crucial stage".
She added that vital installations have to be dismantled which would not allow Iran to build nuclear weapons.