The central bank took the decision under its 'Early Warning' system of supervision to deal with some serious interference of the board members in operations of these banks and other management problems.

BB General Manager Mir Abdur Rahim has been attached to Premier Bank and GM K M Jamsheduzzaman to Al-Arafah Bank.

In separate letters, the BB told the banks the two observers will be present at their board and executive committee meetings. The banks must co-operate with them and send them the files and documents related to the meetings three days in advance.

The observers are also authorised to give opinions at the board meetings, the letters said.

The letters also specified the problems the BB found with the banks. The central bank said both the banks on various occasions violated BB circulars and guidelines, and some of their directors have been found to be involved in irregularities.

Besides, conflicts between board members and their interference in the banks' activities are posing threats to the banks' future, the letters said. This is why, the central bank said, it deputed the two observers there under the Bank Company Act.

The move also follows the findings of an investigation into the opening of 17,000 false accounts by Premier Bank apparently to manipulate its initial public offering.