The proposals cleared by the panel will be submitted before the Cabinet every quarter, the release stated.
The panel may also direct the PSBs to examine proposals for amalgamation. It will also receive inputs from the Reserve Bank of India before granting an in-principle nod to the proposals, said the statement.
The Alternative Mechanism panel will devise its own procedure for appraisal of amalgamation proposals by banks, and be guided overall by the objectives of the Nationalisation Acts (Banking Companies (Acquisition and Transfer of Undertakings) Acts, 1970 and 1980).
The final schemes formulated will be approved by the Central Government, and laid in both the Houses of Parliament. The panel will be serviced by the Department of Financial Services for this purpose.
Finance Minister Arun Jaitley had also said that the recapitalisation of state banks would be followed by a series of reforms.
Twenty-one state-run banks account for more than two-thirds of India's banking assets. But they also account for a bulk of the record Rs. 9.5 lakh crore of stressed loans.
(Except for the headline, this story has not been edited by NDTV staff and is published from a syndicated feed.)