The Banks Board Bureau (BBB) on Friday recommended Dinesh Kumar Khara as the next chairman of State Bank of India (SBI).

At present, Khara is the managing director of the country’s largest lender in charge of global banking and subsidiaries. He will replace Rajnish Kumar whose tenure will end on October 7. The ball is now in the appointments committee of the cabinet which will have to give its green signal.

In a statement, the bureau said that it interfaced with four managing directors of the bank —Arijit Basu, C. S. Setty, Ashwani Bhatia and Khara. Incidentally, earlier this week, Bhatia was elevated as the managing director.

Khara is the senior most managing director at SBI. He applied for the chairman’s post for the second time.

In 2017, he was among the four contenders for the post to replace Arundhati Bhattacharya. While there was buzz of Rajnish Kumar getting a one-year extension, the bureau’s decision will mean that he will demit office in October.

The head hunter for state-owned banks and financial institutions added that it has also recommended Setty as the candidate on the “reserve list” for the vacancy.

BBB is headed by former secretary in the department of personnel and training Bhanu Pratap Sharma.

Khara, did his masters in Business Administration from FMS New Delhi and is a post-graduate in commerce.

He joined SBI as a probationary officer in 1984 and has experience in all areas of commercial banking, including corporate and SME credit, international banking operations and retail credit.

He was also a key figure behind the merging five associate banks and Bhartiya Mahila Bank with SBI.

Khara’s selection is now a formality and he is the second high-profile bank appointment this month after Sashidhar Jagdishan, who was picked as the next managing director and CEO of HDFC Bank. He will replace Aditya Puri who is due to retire on October 26.

Both these bank heads will have the task cut out for them to not only contain a spike in bad loans during the second half of this fiscal but also kickstart credit growth which has taken a hit because of the risk aversion among banks.

On Thursday, Reserve Bank of India (RBI) governor Shaktikanta Das criticised banks for being excessively risk averse, saying this approach was “self-defeating” and the lenders will not be able to win their bread.

For the first quarter ended June 30, bad loans at SBI in absolute terms stood at Rs 1,29,661 crore, lower than Rs 1,49,092 crore in the preceding three months while the percentage of gross NPAs also fell to 5.44 per cent.

However, it is feared that once the relaxation given by the RBI on recognition of bad loans ends, banks may see a rise in their NPAs. Khara will also have to look at boosting the bank’s credit growth which stood at 6.58 per cent during the first quarter of this fiscal.

At the same time, he may also have to contend with an aggressive Jagdishan who is set to increase the private sector bank’s footprint in the rural and semi-urban areas of the country.