Besides Chatterjee, the committee would consist of Chief Secretary, Home Secretary, DGP, other officers and members of Congress and CPI(M).
Flagging the issue for the first time since the racket was unearthed on November 21, Banerjee told the House that the incident was unfortunate and worrisome.
She said the moment the matter came to the government's notice, strong action had been taken with the arrest of 20 persons, including doctors, quacks and traffickers and suspension of licenses of three nursing homes and two NGOs.
The Chief Minister said the matter had also come to light earlier in 1982 and then in 2010 as reported in the media.
A total of 15 children had been rescued on November 21, out of which two died.
One of the children had been returned to his biological parent, Banerjee said, adding that a strict monitoring was required to curb the menace.
Initially the Chief Minister said that the panel would be headed by the Chief secretary, but later changed it when CPI(M) member Sujan Chakraborty assked whether it was possible for Chatterjee to stay in the panel headed by a bureaucrat.
The Chief Secretary was then made the convenor of the panel.
Reacting on reports of the racket having political affiliation, the TMC supremo urged her colleagues not to give any political protection to those indulged in crime.
She also directed the panel to meet once a month. Later, the Chief Minister's proposal was adopted by the House by a show of hands.
Banerjee said that efforts should be made to extend humanitarian aid to poor people who were forced to sell their children in lieu of money.
But those who are doing this out of greed will be dealt with strongly, she added.