MUMBAI, June 25 (Reuters) - India's central bank has appointed a director on the board of Bandhan Bank, the private lender said in a notification to exchanges late on Monday.

Arun Kumar Singh, a chief general manager at the Reserve Bank of India, will act as additional director of Bandhan Bank for one year from June 24, the lender said.

The central bank and the lender did not specify the reason for the decision.

India's central bank has the power to appoint directors on bank boards under the Banking Regulation Act and typically does so to increase oversight of a lender's operations.

"The main purpose to appoint an additional director was to ensure smooth management transition," a source familiar with the central bank's thinking said on Tuesday.

The RBI wanted to be a part of Bandhan Bank's board and decision-making process, especially "when things are not very rosy for the bank", the source said, without offering more details.

The source did not wish to be identified because he was not authorised to speak with the media.

The RBI did not immediately respond to a Reuters' email seeking comment.

Bandhan Bank is set to see a management transition as Managing Director and CEO Chandra Shekhar Ghosh retires on July 9 after spending nearly a decade at the helm.

The RBI has yet to approve a name for the CEO's post and the process is underway, the source said.

Shares of the Mumbai-listed Bandhan Bank fell 4.4% in early trade on Tuesday, but pared losses to trade down 1.4%.

Macquarie analyst Suresh Ganapathy said in a note that while he expects Bandhan's stock to fall in the near-term, the RBI's move "is more of a prudent measure".

Bandhan Bank reported a 93% drop in net profit in the three months to March 31, as it wrote-off bad loans and made provisions for potential non-performing loans.

The bank had in January disclosed that a set of loans it gave out during the COVID-19 pandemic under a government-backed scheme were being examined by the National Credit Guarantee Trustee Company, an agency set up by the government to cover defaults by small businesses. (Reporting by Siddhi Nayak; Editing by Janane Venkatraman and Mrigank Dhaniwala )