New Delhi: Moving ahead with reforms in the public sector banking space, the government has constituted a ministerial panel headed by Finance Minister Arun Jaitley that will oversee merger proposals of state-owned banks.


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The other members of the panel include Railway and Coal Minister Piyush Goyal and Defence Minister Nirmala Sitharaman.


"Govt walks the talk on banking reforms; constitutes Alternative Mechanism for PSBs consolidation; Finance Minister to head," Financial Services Secretary Rajiv Kumar said in a tweet.


While announcing the unprecedented Rs 2.11 lakh crore capital infusion roadmap for the public sector banks last week, Jaitley had said, this will be accompanied by series of banking reforms over next few months.


The constitution of Alternative Mechanism (AM) is a movement in that direction.


The Union Cabinet in August had decided to set up an Alternative Mechanism to fast track consolidation among public sector banks to create strong lenders.


The move to create large banks aims at meeting the credit needs of the growing Indian economy and building capacity in the PSB space to raise resources without dependence on the state exchequer.


The AM will oversee the proposals coming from boards of PSBs for consolidation.


The decision to set up the AM follows State Bank of India merging its five associate banks, as also the Bharatiya Mahila Bank, with itself.