NEW DELHI (Reuters) - An Indian government panel, tasked with recommending candidates for top positions of state-run banks and institutions, has picked Challa Sreenivasulu Setty as State Bank of India's next chairman.

The incumbent chairman of SBI, India's largest bank by assets, Dinesh Khara, is set to retire from the post on August 28.

The Financial Services Institutions Board (FSIB) interviewed three candidates on June 29, and chose Setty for the top job at India's largest lender, it said in a statement on Saturday. The recommendation is made to the federal government, that will take a call on appointing incumbent Khara's successor.

Setty is one of the four managing directors at SBI and currently heads international banking, global markets and technology departments of the bank.

(Reporting by Siddhi Nayak and Nikunj Ohri; Editing by Tomasz Janowski)