Bangladesh Bank has appointed an observer to One Bank, prompted by its overall "financial and management related state of affairs".

Observers are tasked with sitting at and taking note of board meetings and reporting back to the central bank.

The appointment of Md Shazzad Hossoin, general manager of the Department of Banking Inspection-1 of the central bank, came on Sunday.

The central bank usually takes such decisions when financial indicators of a lender start to worsen.

But when it came to appointing the observer at One Bank, the banking watchdog has given more priority to the behaviours of members of the board of directors rather than the lender's financial indicators, said a central bank official preferring not to be named.

In addition, some financial indicators of the bank have also deteriorated in recent times, he said.

Md Serajul Islam, a spokesperson and executive director of the central bank, said the initiative had been taken considering the overall situation of the bank.

He declined to comment about the indictors that worsened.

In July this year, the central bank removed HRC Group Chairman Sayeed Hossain Chowdhury from the post of the chairman of One Bank due to his failure to pay back loans on time.

As per the central bank decision, Chowdhury will not be able to remain as a director of the bank for the next three years.

Non-performing loans at One Bank stood at Tk 1,954 crore as of June this year, which is 9.63 per cent of its outstanding loans, according to data from the central bank.

Defaulted loans amounted to Tk 1,835 crore as of June last year.

Net profit, however, increased to Tk 95.91 crore in the first half of this year in contrast to Tk 41.79 crore one year ago.

The bank had 31 loss-making branches in June this year. It was 21 a year earlier.