The watchdog was among the measures that Mizuho outlined in a report to regulators on how it would deal with the embarrassing revelations, which have also engulfed rivals Mitsubishi UFJ and Sumitomo Mitsui Banking Corp.
Mizuho said the oversight panel — including outside professionals and headed by the bank’s president — would keep an eye on its business practices.
It was aimed at “addressing anti-social elements from the perspective of strengthening our response”, Mizuho added, using a common term for organised crime.
Mizuho also plans to introduce a new system authorising independent experts to appoint board members of Mizuho Financial Group in an effort to revamp its management, local media reported.
Mizuho is considering inviting five to six board members, including the chairman, from outside the banking group, Japanese broadcaster NHK reported.
Japan’s financial sector has been under a cloud over the past few months after it emerged that Mizuho’s credit affiliate was lending money to members of Japan’s notorious Yakuza crime syndicates.
The crime groups are involved in activities ranging from prostitution and drugs to extortion and white-collar crime.
Last month, Japan’s financial watchdog ordered Mizuho to suspend part of its loan business as punishment for its links to organised crime, after earlier telling the lender to improve its management.
Mizuho chairman Takashi Tsukamoto is to step down from his post at the end of March to take responsibility for the scandal.
The bank had initially told regulators that its top management were unaware of the Yakuza links. It later conceded that current and former presidents were in a position to know about the issue.