I am asking this question out of curiosity if there are any cryptographic algorithm that has a block length more that 128 bit. I am new to cryptography and I didn't know any. AES 128, 192, 256 all have same block length of 128 bit. Also if the answer is 'NO' then what can be the possible challenges of having larger block size. Thanks a lot in advanced for your help.
Taking note of comment by OP on SO, I suggest checking out IANA for encryption algorithms and cipher suites used by various Internet protocols, registered AEADs can be a good start. NIST also has a lightweight cryptography project that is on-going as of 2020.
Block ciphers rely on "mode of operation" to provide actually functional data encryption, and most mode of operations are designed for 128-bit blocks, so there's few block ciphers with bigger block size.
On the other hand, stream ciphers such as ChaCha, and its elder sister Salsa have no such restriction, and use 512-bit blocks. If you want to compare performance, RC4 may serve as a base reference.
As for the NIST LWC project, there's a report on its 1st round status.
In the designs, smaller block size typically results in better implementations (though, the extent of this may vary on the paradigm and the instruction set, e.g. ARX ciphers). That is, encrypting two 64-bit blocks would be faster than encrypting one 128-bit block (with the same key size and estimated security). Roughly speaking, diffusion and confusion happen much faster.
However, 64-bit blocks have issues in modes which have birthday-bound attacks (see https://sweet32.info/ ). So 128-bit block size is the most "optimal" choice.