Request for Proposal and Quote
For
End to End Solution for Implementation of Enterprise-wide Integrated Risk Management
Architecture in accordance with the International Best Practices and Guidelines of RBI/BCBS on
Basel II, Basel- III, ALM and FTP
(Also referred to as Project in this RFP)
(Experience Next Generation Banking)
Integrated Risk Management Department
SIB House, 2nd Floor, Mission Quarters,
Thrissur, Kerala-680001
Ph:-0487-2423858/2420020(Ext:-357)
Name of the Company
:
The South Indian Bank Limited
Date of issue of RFP document
:
08/03/2014
RFP reference number
:
IRMD/ RFP /001/2014
Last Date and Time for receipt of Bid
:
28/03/2014
Disclaimer
The information contained in this Request for Proposal (RFP) document or information provided
subsequently to bidder(s) or applicants whether verbally or in documentary form by or on behalf
of The South Indian Bank Limited, is provided to the bidder(s) on the terms and conditions set out
in this RFP document and all other terms and conditions subject to which such information is
provided.
This RFP document is not an agreement and is not an offer or invitation to bid by The South
Indian Bank Limited to any parties other than the applicants who are qualified to submit the bids
(“bidders”). The purpose of this RFP is to provide the bidder(s) with information to assist them in
formulation of their proposals. This RFP does not claim to contain all the information each bidder
may require. Each bidder should conduct its own investigations and analysis and should check the
accuracy, reliability and completeness of the information in this RFP and where necessary obtain
independent advice. The South Indian Bank Limited makes no representation or warranty and
shall incur no liability under any law, statute rules or regulations as to the accuracy, reliability or
completeness of this RFP. The South Indian Bank Limited may in its absolute discretion, but
without being under any obligation to do so, update, amend or supplement the information in this
RFP.
Integrated Risk Management Department, The South Indian Bank Limited.
Page 2
Glossary
Sl. No.
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
Acronym/ Term Used
AFS
AGL
AIRB
ALM
AMA
AMFI
ASCII
ATS
Bank
BALM
11.
Basel II Guidelines
12.
Basel II RBI
Guidelines
13.
Basel III Guidelines
14.
Basel III RBI
Guidelines
15.
16.
17.
18.
19.
20.
21.
22.
23.
24.
25.
26.
27.
28.
29.
30.
BCBS
BEICF
BIS
BSE
CASA
CBS
CC
CCIL
CD
CDS
CORDEX
CRISIL
CRMS
CRR
CSV
CVA
Definition
Available For Sale
Aggregate Gap Limit
Advanced Internal Ratings Based
Asset And Liability Management
Advanced Measurement Approach
Association Of Mutual Funds In India
American Standard Code For Information Interchange
Annual Technical Support
The South Indian Bank Ltd
Banks Asset Liability Management System
Framework for Capital Measurement and Capital Standards issued
by Basel Committee on Banking Supervision
Master Circular - Prudential Guidelines on Capital Adequacy and
Market Discipline- New Capital Adequacy Framework (NCAF)
Implementation of the Advanced Measurement Approach (AMA)
for Calculation of Capital Charge for Operational Risk - Guidelines
Capital Adequacy - The Internal Ratings Based (IRB) Approach to
Calculate Capital Requirement for Credit Risk Prudential
Guidelines on Capital Adequacy - Implementation of Internal
Models Approach (IMA) for Market Risk
A global regulatory framework for more resilient Banks and
Banking systems and International framework for liquidity risk
measurement, standard and monitoring
Guidelines on Implementation of Basel III Capital Regulations in
India Guidelines on Liquidity Risk Management and Basel III
Framework on Liquidity Standards, Capital Requirements for
Bank‟s Exposures to Central Counterparties
Basel Committee on Banking Supervision
Business Environment And Internal Control Factors
Bank For International Settlements
Bombay Stock Exchange
Current & Savings Account
Core Banking Solutions
Cash Credit
Clearing Corporation Of India Ltd.
Certificate Of Deposit/Compact Disc
Credit Default Swap
Credit & Operational Risk Loss Data Exchange
Credit Rating Information Services Of India Limited
Credit Risk Management System
Cash Reserve Ratio
Comma-Separated Value
Credit Valuation Adjustment
Integrated Risk Management Department, The South Indian Bank Limited.
Page 3
31.
32.
33.
34.
35.
36.
37.
38.
39.
40.
41.
42.
43.
44.
45.
46.
47.
48.
49.
50.
51.
52.
53.
54.
55.
56.
57.
58.
59.
60.
61.
62.
63.
64.
65.
66.
67.
68.
69.
70.
71.
72.
73.
74.
75.
DGA
DICT
DVD
DVP
EAD
EDW
EWIRM
FEDAI
FIFO
FIMMDA
FIRB
FTP
FX
GARCH
GL
GLM
GLMM
GUI
HFT
HRMS
HTM
ICAAP
iCDMS
IGL
IMA
IMF
IR
iRAC
IRB
IRMD
IRMS
IT
KRI
LDP
LGD
LIBOR
LIFO
LOS
M
MIBOR
MIS
MRMS
MTM
MVA/E
MVS
Duration Gap Analysis
Department Of Information & Communication Technology
Digital Video Disc
Delivery Versus Payment
Exposure At Default
Enterprise Data Warehouse
Enterprise Wide Integrated Risk Management
Foreign Exchange Dealers‟ Association Of India
First In First Out
Fixed Income Money Market And Derivatives Association Of India
Foundation Internal Ratings Based
Fund Transfer Pricing
Foreign Exchange
Generalized Autoregressive Conditional Heteroskedasticity
General Ledger
Generalised Linear Model
Generalised Linear Mixed Model
Graphical User Interface
Held For Trade
Human Resource Management System
Held To Maturity
Internal Capital Adequacy & Assessment Procedure
Integrated Corporate Data Management System
Individual Gap Limit
Internal Model Approach
International Monetary Fund
Interest Rate
Income Recognition And Asset Classification
Internal Ratings Based
Integrated Risk Management Department
Integrated Risk Management System
Information Technology
Key Risk Indicators
Low Default Portfolio
Loss Given Default
London Interbank Offer Rate
Last In First Out
Loan Origination System
Effective Maturity
Mumbai Interbank Offer Rate
Management Information System
Market Risk Management System
Marked To Market
Market Value Of Asset/ Equity
Market Value Sensitivity
Integrated Risk Management Department, The South Indian Bank Limited.
Page 4
76.
77.
78.
79.
80.
81.
82.
83.
84.
85.
86.
87.
88.
89.
90.
91.
92.
93.
94.
95.
96.
97.
98.
99.
100.
101.
102.
103.
104.
105.
106.
107.
108.
109.
110.
111.
112.
113.
114.
115.
116.
117.
118.
119.
120.
NABARD
NAS
NCAF
NDS
NEFT
NII
NIM
NOOP
NPA
NPV
NSE
OD
OEM
ORMF
ORMS
OSMOS
OTC
PD
PFE
P&L
PVBP
QRRE
RAPM
RAROC
RBI
RCA
RCSA
RFP
RO
RTGS
RWA
SI
SIDBI
SL
SLA
SLR
SLS
SMM
SMS
SVaR
SWIFT
TBO
TGA
TMO
TO
National Bank For Agriculture And Rural Development
Network Attached Storage
New Capital Adequacy Framework
Negotiated Dealing System
National Electronic Funds Transfer
Net Interest Income
Net Interest Margin
Net Overnight Open Position Limit
Non-Performing Asset
Net Present Value
National Stock Exchange
Overdraft
Original Equipment Manufacturer/ Product Vendor
Operational Risk Management Framework
Operational Risk Management System
Off-Site Monitoring And Surveillance
Over The Counter
Probability Of Default
Potential Future Exposure
Profit & Loss
Price Value Of A Basis Point.
Qualified Revolving Retail Exposures
Risk Adjusted Performance Measurement
Risk Adjusted Return On Capital
Reserve Bank Of India
Root Cause Analysis
Risk And Control Self-Assessment
Request For Proposal
Regional Office
Real Time Gross Settlement
Risk Weighted Assets
System Integrator
Small Industries Development Bank Of India
Specialized Lending
Service Level Agreement
Statutory Liquidity Ratio
Structural Liquidity Statement
Standardized Measurement Method
Short Message Service
Stressed Value At Risk
Society For Worldwide Interbank Financial Telecommunication
Treasury Back Office
Traditional Gap Analysis
Treasury Mid Office
Technical Offer
Integrated Risk Management Department, The South Indian Bank Limited.
Page 5
121.
122.
123.
124.
125.
126.
TSA
UAT
VaR
XML
WCDL
ZCYC
The Standardized Approach
User Acceptance Test
Value At Risk
Extensible Mark-Up Language
Working Capital Demand Loan
Zero Coupon Yield Curve
The term „Project period/duration of project/tenure of project‟ used in this RFP includes
Implementation period (1 year), Warranty period (2 years), AMC period (5 years) and any
further period remaining till the date of receipt of approval from RBI in respect of IRB, AMA
and IMA.
The term „GO LIVE date‟ used in this RFP refers the point of time in which the Banks is capable
of computing the capital charge under advanced approaches of Basel-II/Basel-III and conduct
ALM and FTP in tune with international best practices using banks‟ own data to the satisfaction
of top management. The banks‟ own data is defined as the financial/non-financial information of
the South Indian Bank Limited which is generally used for computation of CRAR under
Basel- II/Basel-III norms and performing ALM and FTP in tune with international best practices.
Further it is envisaged that as on GO-LIVE date the information residing in Finacle, Polaris,
LOS and any other source system should flow seamlessly into the IRMS to generate CRAR and
meet other functional requirements specified in this RFP.
Integrated Risk Management Department, The South Indian Bank Limited.
Page 6
TABLE OF CONTENT
I.
INVITATION FOR BIDS: ............................................................................................... 9
II.
ABOUT THE SOUTH INDIAN BANK LIMITED ...................................................... 13
III.
BACK GROUND ........................................................................................................... 14
IV.
SCOPE OF WORK......................................................................................................... 18
V.
FUNCTIONAL REQUIREMENTS FOR CREDIT RISK............................................. 25
VI.
FUNCTIONAL REQUIREMENTS FOR OPERATIONAL RISK ............................... 42
VII.
FUNCTIONAL REQUIREMENT FOR MARKET RISK ............................................ 51
VIII.
FUNCTIONAL REQUIREMENTS IN RESPECT OF PILLAR- II, PILLAR- III &
BASEL III AND INTEGRATED CAPITAL COMPUTATION MODULE................. 69
IX.
FUNCTIONAL REQUIREMENTS OF ALMS ............................................................. 72
X.
TECHNICAL REQUIREMENTS .................................................................................. 82
XI.
AMENDMENT OF RFP: ............................................................................................... 87
XII.
INSTRUCTIONS FOR BID SUBMISSION.................................................................. 87
XIII.
SUBMISSION OF BIDS ................................................................................................ 88
XIV.
ADDITIONAL INSTRUCTIONS FOR BIDDERS ....................................................... 91
XV.
TERMINATION............................................................................................................. 99
XVI.
ELIGIBILTY CRITERIA ............................................................................................. 104
XVII.
SELECTION STRATEGY ........................................................................................... 107
XVIII. AWARD OF CONTRACT........................................................................................... 112
Integrated Risk Management Department, The South Indian Bank Limited.
Page 7
LIST OF ANNEXURES
Annexure-1 - Check List ............................................................................................................. 120
Annexure-2 - Authorization Letter Format ................................................................................. 121
Annexure-3 - Non-Disclosure Agreement Form ........................................................................ 122
Annexure-4 - Check list for submission of eligibility criteria .................................................... 128
Annexure-5- Profile of bidder/Partner ........................................................................................ 129
Annexure-6 - Implementation methodology............................................................................... 131
Annexure-7 - Reference site details ............................................................................................ 132
Annexure-8 - Past Experience .................................................................................................... 133
Annexure-9 - Team profile ......................................................................................................... 134
Annexure-10 - Training .............................................................................................................. 136
Annexure-11 - Cover Letter for Commercial Bid....................................................................... 137
Annexure-12 - Format for furnishing the price of Software/Hardware ...................................... 139
Annexure-13 -Table for Arriving at the Total Ownership Cost ................................................ 144
Annexure-14 - Bid submission Covering Letter ......................................................................... 145
Annexure-15 - Notification of Acceptance ................................................................................. 147
Annexure-16 - Specimen contract form ...................................................................................... 148
Annexure-17 - Performance Bank Guarantee Format ................................................................ 155
Integrated Risk Management Department, The South Indian Bank Limited.
Page 8
I.
INVITATION FOR BIDS:
The South Indian Bank Ltd, hereinafter called “The Bank” intends to invite Techno -Commercial
bids from eligible Bidder to provide end to end software solution for Implementation of
Enterprise-wide Integrated Risk Management Architecture in accordance with the International
Best Practices and Guidelines of RBI/BCBS on Basel II, Basel- III, ALM and FTP.
A complete set of Request for Proposal (RFP) can be obtained during office hours on all working
days either in person or by Post/E-mail on submission of a written application. Alternatively,
complete set of RFP for the above purpose can be downloaded from Bank‟s official website
www.southindianBank.com - Quick Access-Tender/auction-RFP for Implementation of EWIRM
solution .The bidder who has purchased/ downloaded the RFP is required to submit a nonrefundable fee of Rs.25, 000/- in the form of DD/RTGS, in favour of “The South Indian Bank
Ltd” payable at Thrissur during office hours within the last date and time of submission of bid,
failing which the bid of the concerned bidder will not be entertained. The hard copy of this
document (RFP) procured from the Bank or downloaded from the official website, will alone be
treated as authenticated copy for all purposes.
Bid Collection and submission details are given below.
Bid Reference number
:
RFP IRMD/001/2014
Date of issue of RFP
:
08.03.2014
:
15.03.2014, 2.00 PM
Last date and time for seeking
Clarification
Last date and time for submission of
Bids
Completion of Technical
&
Commercial Bid evaluation by Bank
and last date for
informing the
qualified bidders for presentation and
negotiation
Last date for final negotiation with the
qualified bidders
Bid submission fee (non refundable)
:
28.03.2014, 4.00 PM
:
30.04.2014
:
12.05.2014
:
Rs. 25,000/- in the form of Demand Draft in
favor of “The South Indian Bank Ltd” payable
at Thrissur. The DD should be submitted along
with the Bid. Alternatively the bid submission
fee may be remitted through RTGS to Account
number 0299073000000710 (IFSC Code:
SIBL0000299). The bidders who opts payment
by way of RTGS should quote the UTR number
of the transaction.
Integrated Risk Management Department, The South Indian Bank Limited.
Page 9
Address for submission of bids
:
Contact Person
:
Telephone and Fax
:
E– mail
:
The Chief General Manager (IRMD)
The South Indian Bank Ltd
Integrated Risk Management Department,
SIB House, Head Office,
2nd Floor, Mission Quarters
Thrissur , Kerala,
India – 680001
Ms Chithra H, AGM
Integrated Risk Management Department
Tele: 0487-2423858/2420020(Ext:-357)
Mobile: 9447904585
Fax: 0487-2424551
[email protected], [email protected]
Note: Before bidding, the bidders are requested to carefully examine the RFP Document and the
terms and conditions specified therein. If any bidder requires any clarification on this RFP,
may notify the Bank in writing or by email at the Bank‟s mailing address indicated in the
RFP on or before 15.03.2014, 2 PM.
 This RFP is being floated to seek appropriate solutions for the implementation of Enterprisewide Integrated Risk Management Architecture in accordance with the International Best
Practices and Guidelines of RBI/BCBS on Basel II, Basel- III, ALM and FTP. Bank invites
responses from bidder to propose a contractual arrangement for the provision,
implementation and after-sales support as described in this document.
 The purpose of this RFP is to enable the bidder to communicate their qualifications and
product specifications to facilitate the selection of an appropriate risk management solution.
 Bidders should notify the Bank of any error, omission, or discrepancy found in this RFP
document not later than 12.03.2014 4:00 PM.
 The check list for submission of annexures to be attached along with the bid are given in
Annexure-1
 All costs and expenses (whether in terms of time or money) incurred by the bidders in any
way associated with the development, preparation and submission of responses, including but
not limited to attendance at meetings, discussions, demonstrations and for providing any
additional information required by Bank, will be borne entirely and exclusively by the
bidders.
 The bidders must conduct its own investigation and analysis regarding any information
contained in the RFP document and the meaning and impact of that information.
 All bids (Technical & Commercial) must be submitted at the same time giving full particulars
in separate sealed envelopes at the Bank‟s address within the time period specified above.
 The Bank reserves the right to accept or reject in part or full any or all the offers without
Integrated Risk Management Department, The South Indian Bank Limited.
Page 10








assigning any reasons whatsoever.
No further discussion/interface will be entertained with bidders whose bids have been
technically disqualified.
Those technically qualified bidders may depute their representative/s (not more than 3) to
attend the negotiation meeting held on or before 12-05-2014. The representative/s has/have to
submit an authority letter duly signed by the bidder, authorizing him to represent and attend
the negotiation process on behalf of the bidder. The format of the authorization letter is given
in Annexure-2.
The scope of the services specified under this RFP is governed by the guidelines issued by
RBI on implementation of IRB, IMA, TSA and AMA approaches of Basel- II & Basel III
guidelines and international best practices on ALM and FTP. Any change made by RBI on
these matters by way of amending the existing guidelines or issue of fresh guidelines on these
matters shall automatically enlarge the scope of work specified under this RFP and the duties
of selected bidder shall deemed to be discharged only when the Bank complies with the
revised guidelines issued on this matter.
The Bank expressly stipulates that the selection of bidder under this RFP is on the
understanding that this RFP contains only the principal provisions for the entire assignment
and the services rendered in accordance with the scope of work defined under this RFP are
only a part of the assignment. The bidder shall perform all such tasks, render requisite
services as may be required for successful completion of the project to the satisfaction of the
Bank at no additional cost to the Bank, to attain the underlying objectives for which this RFP
is floated.
The Bank reserves the right to change the dates mentioned above or in the RFP, which will be
communicated through the Bank‟s web‐site.
Any bid submitted without payment of Rs. 25,000, being the Bid Submission Fee, shall be
immediately rejected.
The discretion with regard to the procurement of hardware and ALM system lies with the
bank; however the bidder shall be bound to furnish all the particulars related to hardware and
ALM system as specified in this RFP.
Finally selected bidder based on this RFP terms and conditions should supply, install and
commission a comprehensive solution in our Bank for implementing an Enterprise-wide
Integrated Risk management Architecture in accordance with the guidelines of RBI/BCBS on
Basel II Advanced Approaches.The proposed solution should cover all the branches/Regional
offices /administrative offices/departments as decided by the Bank and have the capability to
scale up for meeting future requirements.
A. Who can submit the bid?
a. The bid shall be submitted by either an OEM or a SI. The term bidder used in this RFP
refers to the entity who has submitted the bid.
b. One bidder cannot submit more than one bid.
Integrated Risk Management Department, The South Indian Bank Limited.
Page 11
c. The bidder is responsible to carry out the entire end to end implementation of the software
solution as per the scope of work specified in this RFP.
d. If the bidder intends to partner with another entity to complete the entire assignment, he
shall clearly specify in the bid the name of that entity (i.e. OEM/SI) with whom he proposes
to partner. Further the bid should clearly spell out the tasks proposed to be undertaken by the
partner. If any of the functional/technical requirements is achieved with the help of partner,
details of such requirements shall be mentioned in the bid and during the product
demonstration the partner shall display his capability in achieving the aforementioned
requirements. The partner is also required to fulfil the eligibility criteria specified in this
RFP and the bidder is responsible for furnishing the required details necessary to check the
eligibility of partner.
e. The Bank shall enter into separate contract with both parties and these contracts shall
clearly outline the obligations of each party to Bank in course of implementation and
thereafter.
f. One bidder in the capacity of SI can partner with multiple OEMs (for separate modules such
as credit risk, market risk, operational risk, ALM and FTP) to provide EWIRM Solution
through this bid.
g. One OEM vendor cannot act as partner of more than two SI‟s who submit the bid.
h. The Bank intends to procure Perpetual/Permanent Enterprise Licenses with fixed AMC. The
Bank should have the entitlement/ right to use these licenses without any restriction of any
nature and at all geographic locations. The bidder should also ensure that the official &
authentic license definition of software solution is shared with Bank.
i. All the new software release/version / upgrades or otherwise for any reason should be made
available to the Bank and the Bank is not liable to pay / oblige SI or any OEM any
additional charges / fees pertaining to third party royalty charges etc. And also this should
not be the reason to restrict the Bank from upgrading to the new release / new version of the
software.
j. In case when bid is submitted by SI, the OEM should endorse the hardware & related
software sizing, stating that technically their software can be deployed on the proposed
sizing. This can be through declaration or sharing authentic / official benchmark reports.
Chief General Manager
Integrated Risk Management Department
The South Indian Bank Ltd
Thrissur
Integrated Risk Management Department, The South Indian Bank Limited.
Page 12
II. ABOUT THE SOUTH INDIAN BANK LIMITED
The South Indian Bank Limited (website- www.southindianBank.com) is one of the leading
Scheduled commercial Banks having 800 branches spread across 29 States/ Union Territories in
India. The Head (Registered) Office of the Bank is situated at Thrissur, Kerala State. There are
Nineteen Regional Offices (ROs), geographically spread across the country, coming under the
administrative control of the Head Office.
The South Indian Bank Limited offers various customer services such as Anywhere-Any Time
Banking supported with online ATMs, Internet Banking, International ATM-Cum-Debit Cards,
Mobile Banking, online payment, on line trading etc. The Bank has already adopted significant
technological advancements and uses them to leverage business operations such as NDS-PDO,
RTGS, NEFT, Domestic ATM sharing, NPS, SWIFT, Treasury, Forex, POS, etc.
The Bank is using „Finacle‟ (from M/s. Infosys Technologies Ltd) as the Core Banking Solution
(CBS).The Bank achieved 100% roll out of Finacle as on March, 31, 2007. The Bank presently
uses Finacle 7.0.25 version and it proposes to upgrade the Core Banking Software to Finacle
version 10 by December 2014. The Bank has setup a robust scalable state-of-the art Wide Area
Network connecting its various branches and offices with its Data Centre. These branches are
connected to datacenter through dual redundant MPLS WAN connectivity.
The South Indian Bank Limited… At A Glance (As on 31.12.2013)
84 Years
• Number of years in banking business
800
• Number of branches
936
• Number of ATM‟s
Rs. 78361 Crore
• Business as on 31.12.2013
14.43%
• Business Growth (Y – to – Y)
17.15%
• Last 5 years business CAGR
Rs.502.27 Crore
• Net Profit for the year ended March 2013
3.02 %
• Net Interest Margin (December 2013)
12.35%
• Capital Adequacy Ratio (Basel II –December 2013)
1.18%
• Net Non-Performing Assets (December 2013)
Integrated Risk Management Department, The South Indian Bank Limited.
Page 13
III. BACK GROUND
In terms of RBI guidelines vide circular DBOD.No.BP.BC.90/20.06.001/2006-07 dated April 27,
2007 and subsequent guidelines on the New Capital Adequacy Framework our Bank has adopted
following methods for calculation of Capital Adequacy under BASEL II norms.
Credit Risk
Standardized Approach
Market Risk
Standardized Measurement Method
Operational Risk
Basic Indicator Approach
The Bank is presently using 19 internally developed rating models to measure the credit risk
associated with different exposures. The computation of risk weighted assets for credit risk under
standardized approach is done in Excel sheet after obtaining required information from Finacle
and external rating database. The capital charge for market risk is computed in Excel sheet using
M-Duration function after obtaining data from Treasury software and necessary market
information. The capital charge for operational risk is computed in Excel sheet, in accordance
with formula prescribed by regulator. In short, the computation of CRAR under standardized
approach is being done using MS- Excel and without use of any software solution.
To improve the risk management practices of Indian Banks, RBI has come out with guidelines &
time schedule for migrating to advanced approaches for all the above three risks. Hence we intend
to upgrade our existing risk management systems and processes and implement Enterprise-wide
Integrated Risk Management Solution compliant with the requirements prescribed under the
guidelines issued by RBI/BCBS and international best practices in respect of Basel-II, Basel- III,
ALM and FTP.
We intend to implement an Enterprise-wide Integrated Risk Management Architecture in
accordance with provisions of following circulars/guidelines and international best practices.
1. Master Circular - Prudential Guidelines on Capital Adequacy and Market Discipline - New
Capital Adequacy Framework (NCAF) RBI /2013-14/72 DBOD.No.BP.BC.
9 /21.06.001/2013-14 July 1, 2013
2. Implementation of the Internal Rating Based (IRB) Approaches RBI/2011-12/311
DBOD.No.BP.BC.67/21.06.202/2011-12 dated 22.12.2011 for Credit Risk.
3. Prudential Guidelines on Capital Adequacy - Implementation of Internal Models Approach
RBI/2009-10/384 DBOD.No.BP.BC.86 /21.06.001 (A)/2009-10 dated April 7, 2010 for
Market Risk.
4. Implementation of the Advanced Measurement Approach (AMA) RBI/2010-11/488
DBOD.No.BP.BC.88/21.06.014/2010-11
5. Master Circular – Basel III Capital Regulations RBI/2013-14/70 DBOD.No.BP.BC.2
Integrated Risk Management Department, The South Indian Bank Limited.
Page 14
/21.06.201/2013-14 dated July 1, 2013.
6. RBI guidelines on Liquidity risk management by Banks RBI No 2012-13/285
DBOD.BP.No.56/21.04.098/ 2012-13 dated November 7, 2012.
7. RBI guidelines on Banks‟ Asset Liability Management Framework – Interest Rate Risk
RBI/2010-11/263 DBOD. No. BP. BC. 59 / 21.04.098/ 2010-11 dated November 4, 2010.
8. RBI
Guidelines
on
stress
testingRBI
/
2006-07/
444
DBOD. No. BP. BC.101 / 21.04.103/ 2006-07 Dt. June, 26, 2007.
9. RBI Guidelines on stress testing- RBI/2013-14/390/ DBOD.BP.BC.No.75//21.04.103/201314 Dated December 2, 2013.
10. Any other relevant guidelines from RBI/BCBS shall be applicable.
The Bank has already taken steps in this direction and appointed an external consultant for
providing assistance for migrating to advanced risk management approaches and for the
implementation of an Enterprise Wide Integrated Risk Management Architecture. This Request
For Proposal (RFP) is intended to invite Techno-Commercial Bids from eligible bidders to
provide end-to-end solution for implementation of Credit Risk Management System (CRMS),
Operational Risk Management System (ORMS), Market Risk Management System (MRMS) and
an Integrated Capital Computation and Reporting Module for the Standardized and Advanced
approaches under RBI Guidelines on Basel II and Basel III to have an integrated risk
management frame work, referred to as EWIRM Solution in this RFP. Bank also plans to
benchmark the ALM and FTP methodology in tune with leading international best
practices/extant RBI guidelines and upgrade our ALM systems for this purpose, if required.
A. Objective of RFP
The Bank has decided to float this RFP to achieve the following objective:
 To invite techno-commercial bids from corporate body/ Public or Private Ltd
company/Public sector undertaking/ Partnership Firm/LLP, for undertaking the scope of
work as outlined in Point No:- IV.
 To appoint a competent party through an open/hybrid (or combination of both) tendering
process for laying down an Enterprise-wide Integrated Risk Management Architecture
(EWIRM) in accordance with the International Best Practices and Guidelines of
RBI/BCBS on Basel II, Basel- III, ALM and FTP. The EWIRM shall exhaustively
accomplish the scope of work detailed in this RFP.
B. Responsibilities of Bidder:Successful bidder selected based on the evaluation criteria specified in this RFP should
1) Implement the solution at all branches, Regional offices and various departments as decided
by the Bank.
2) Implement an EWIRM solution which is capable of:
a. Supporting estimation of all risk components and capital calculations (regulatory &
Integrated Risk Management Department, The South Indian Bank Limited.
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economic) as per the guidelines issued by RBI and Basel under the Standardized and
advanced approaches of Basel norms.
b. Meeting the Pillar I, II, III and stress testing requirements as per RBI and Basel
guidelines on Basel II and Basel III.
c. Supporting all the required statistical, analytical, risk modelling, pricing and reporting
requirements as per Bank‟s internal requirements.
d. Performing back testing and stress testing
e. Achieving compliance with all RBI guidelines issued on liquidity management/ALM
and FTP.
f. Supporting ALM and FTP in accordance with best international practices
g. Computing LCR and NSFR as per RBI and BCBS guidelines
3) Set up, installation and testing of the required hardware and software within the Bank
including its data centers at Cochin and Disaster Recovery Site at Bangalore.
4) On awarding the contract, the bidder should gain understanding of the functioning of the
existing system from core users of the Bank. He shall prepare a Business requirement
Document based on the gap analysis and other requirements of the RFP. The bidder shall
undertake to obtain Bank‟s approval of the Business requirement documentation (over and
above Functional Requirements Specifications and System requirement Specifications) and
associated project plans before software customization work commences. The document
should provide the plan in detail based on the criticality of the requirements. The bidder
shall allow adequate time for review of the above documents by the Bank.
5) Ensure that the system is in compliance with RBI requirements for all Basel II advanced
approaches and Basel III and other relevant regulatory guidelines. Any instances of noncompliance observed will need to be rectified at no additional cost and well within timelines
stipulated by the regulator
6) Ensure that software solution being supplied should be capable to get integrated with a Data
Ware housing solution; the Bank may go for later point of time. It needs to have standard
interfacing capabilities.
7) Identify Project Manager, Project Leaders and members of the development teams with
relevant skills. The bidder will intimate the Bank if there is any change in the project team.
The bidder will ensure proper back up of project leaders and manager and the plan should be
intimated to the Bank. The minimum experience of the project team personnel like Project
Manager, Project Leader and Programmers put on work preferably should be 2 years.
Systems study and all development activities will have to be undertaken at the Bank‟s
locations acceptable to Bank.
8) Provide Facilities Management support for EWIRM solution and associated IT
Infrastructure proposed by the bidder for the entire project duration.
9) Ensure that the solution offered should have all components mentioned clearly with its
license requirements
10) Impart training on EWIRM solution to designated personnel of the Bank and handling the
system and trainers.
Integrated Risk Management Department, The South Indian Bank Limited.
Page 16
11) Provide full fledged solution at the end of the mutually agreed period post UAT signoff.
12) Incorporate changes in system arising on impact of amendment to regulations/ Bank‟s
policy at no additional cost and well within timelines stipulated by the regulator.
13) Assist the Bank in conducting the User Acceptance tests by providing test plans, scenarios
and resolving gaps.
14) Provide complete module wise documentation including logic used, empirical analysis done,
methodology etc. as per regulatory and audit requirements.
15) Provide all statutory, regulatory Management Information System (MIS), adhoc MIS
(including development if needed) and Executive Information System (EIS) reports as
required by the Bank in the desired format as per regulatory and Bank‟s requirements.
16) Ensure that the system meets all functional and technical requirements specified in this RFP.
17) In case the product/ solution/ vendor/ OEM/SI are amalgamated/ dissolved the impact of
such an event should not have any adverse implication on the service level/ time line/cost
that is proposed for implementation of the solution. Such event would not dilute the
responsibility of the successful bidder in completing the implementation within mutually
agreed time lines.
18) The bidder shall provide the details of hardware including its indicative cost and its
configuration in the format given in Annexure-12.B. The cost of hardware will form part of
the evaluation process; only if t he Bank chooses to procure the hard ware through
successful bidder. Alternatively the Bank may also procure the hardware specified in
Annexure-12.B on its own. The Bank‟s decision in this regard shall be final.
19) Bidder should install & configure various components of the complete solution. The bidder
shall interface the proposed solution with other external systems in the Bank including Core
Banking (Finacle), Credence/Polaris, HRMS, iRAC, iRecovery, iCDMS, BALM (if
required) etc. The term external system also includes proposed systems such as LOS or other
data capture systems, workflow tools etc which the Bank uses from time to time.
20) Bidder should implement & maintain the application software in Main Data center, Near-by
data center and Disaster Recovery (DR) sites.
21) Bidder should provide Modular wise user manual as well as Administrator‟s manual, postimplementation on-site support for 3 months from GO LIVE date and further support till the
end of agreed AMC period.
22) Data migration should be done by the bidder from the existing data already collected by the
Bank (available in various source systems) to the new system with consistency. After going
LIVE the incremental data shall be moved onto the Risk Management solutions on a
scheduled manner, bidder to provide necessary interface or tools for the same.
23) Reports for the migration of data as required by the Bank have to be developed and
generated during the migration with all required controls, balances and checks for the proper
migration.
24) The successful bidder shall provide technical support for the software application systems
supplied under this contract, and will have overall responsibility of the performance,
functionality and operation of the systems under this contract. Any supporting software
Integrated Risk Management Department, The South Indian Bank Limited.
Page 17
25)
26)
27)
28)
29)
provided/installed/configured by the bidder shall be maintained /fine tuned/parameterized by
the bidder, time to time, so that the solution delivers optimal performance.
Security features should meet the standards and procedures as per Bank‟s IT Security Policy
and procedures should be followed, in line with prevailing Industrial Standards.
The bidder to provide the Bank with the proper backup and recovery procedure, with
necessary documents so as to meet any exigencies.
The bidder should ensure that all verification processes in the software solutions should be
governed by maker checker controls.
The bidder‟s overall responsibility includes offering suitable framework, supporting
software solution, recommending the appropriate hardware, impart necessary training and
supply the required documentations/manual.
The bidder shall be also responsible for the following:
 Managing the activities of its personnel or sub-contracted personnel and will hold itself
responsible for any misdemeanours.
 The Supplier's representative or the local office nearest to Thrissur/Cochin shall be the
contact point for the Bank and all the authentic status of Delivery and Installation should
be made available in writing.
 Keep the Bank informed on the progress of the project as per the agreed reporting
schedules.
 The bidder and the BANK together will prepare acceptance test plan, for which bidder
will station its officers in the BANK at no additional cost.
 Incorporate the review comments received from the users.
 Prepare contingency plans.
 Customize software at the Bank‟s premises.
 Incorporate change management as per mutual agreement.
 Help in change management and implementation support at agreed costs, if so desired by
the Bank.
 Inform the Bank about IT infrastructure required for implementation.
 Treat as confidential all data and information about the Bank, obtained in the execution of
his responsibilities, in strict confidence and shall not reveal such information to any other
party without the prior written approval of the Bank/Purchaser. A non-disclosure
agreement should be signed between Bank and bidder. The format of non-disclosure
agreement form is given in Annexure-3.
IV. SCOPE OF WORK
A. Broad scope
The broad scope of the project envisages:
1. Installation, customization, configuration and maintenance of the software required for an
Integrated Risk Management Department, The South Indian Bank Limited.
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2.
3.
4.
5.
6.
Enterprise Wide Integrated Risk Management (EWIRM) Solution to achieve compliance
with Basel- II/Basel- III norms. Any other hardware/software which is essential to run
application and not quoted will be supplied and installed at free of cost.
Parameterization, historical data management, verifying data quality, migrating data, user
acceptance testing, documentation, knowledge transfer and support
Interfacing with other external systems including core Banking software solution, validation
of models and processes and maintenance of application software, system software, database,
interfaces etc
Assistance in supply, installation and maintenance of related hardware at Primary, Near-by
and Disaster recovery data centers of the Bank.
Providing training to Bank‟s designated personnel and also provide Modular wise user
manual as well as administrator‟s manual, post-implementation on-site support for 3 months
from GO LIVE date and further support till the end of agreed AMC period
The solution/s offered should be web based, open platform and support data transfer and
consolidation from the networked systems either online or dial up.
The Project would be implemented at the Head office of the Bank, located at Thrissur, Kerala for
Credit and Operational Risk Management. Requisite modules would need to be rolled out to
Regional Offices, Branch Offices and other Head Office Departments. For Market Risk
Management, project would be implemented at the Banks‟ mid- offices in Treasury, Mumbai and
in International Banking Division (IBD) office at Cochin. Training of all users across various
locations (as necessary), would need to be provided. The hardware and the software products
shall be installed, implemented and maintained at the Banks data center, DICT Cochin and at the
Disaster Recovery Site, Bangalore. Technical support shall be extended from DICT and
functional and operations support shall be from other centres as the Risk Management
Framework demands.
B. Detailed scope
The detailed scope of assistance has been given below
 Gap identification & Resolution
i. The selected bidder will be responsible for conducting the gap analysis for identifying
gaps in Bank‟s framework, policies, procedures, governance, and existing systems which
needs to be bridged prior to deployment of EWIRM architecture. The gap analysis should
be done in the context of Basel II, Basel III and other regulatory guidelines issued by
RBI etc. pertaining to Credit Risk Management, Operational Risk Management, Market
Risk Management, ALM & FTP and Integrated Capital Computation and Reporting.
ii. Provide the Bank with the gap identification report along with the recommendations and
estimated time frames to resolve the same.
iii. Provide various tools /utilities to bridge the gaps identified during GAP analysis phase
Integrated Risk Management Department, The South Indian Bank Limited.
Page 19
without any extra cost.
iv. Determine the customization requirements, in case a particular functionality requirement
is not supported by the existing version of the EWRIM solution;
v. Resolve gaps by customizing the proposed solution by way of modifications/
enhancements, as necessary.
vi. Facilitate data migration from the existing data already collected by the Bank to the new
system with consistency. All the details from the migration date till the date of LIVE
should also be migrated from the existing data to the proposed Risk Management
solutions.
 Design of solution
i. The selected bidder is required to design the EWIRM Solution with the functionalities
identified in the Functional Requirements and Technical Solution Requirements for
Credit Risk Management, Operational Risk Management, Market Risk Management,
Asset Liability Management, Fund Transfer Pricing and Integrated Capital Computation
and Reporting as detailed in this RFP.
ii. Automated Interfaces required for the solution with other internal systems and external
systems has to be provided by the selected bidder to ensure satisfaction of the functional
and technical requirements. Bidder will be responsible for the procurement of any tool
required to develop the interface. Bidder will document the entire interface logic and
process with change management procedures in compliance with Bank‟s policies and
best international practices.
iii. The selected bidder is expected to leverage the Bank‟s existing data center services,
EDW infrastructure (as and when operational), storage, backup tape libraries, archival,
legacy data etc. With the endeavour to reduce the overall cost of procurement to the
Bank, the bidder shall also continuously explore avenues to reduce the cost and act in the
best interest of the Bank.
 Parameterization, Configuration and Customization of software
i. To assist in bridging the identified data gaps for compliance with RBI/BCBS and other
relevant guidelines on integrated risk management framework.
ii. The Bidder shall be responsible for accuracy of the parameters set in the system
according to business needs of the Bank.
iii. The cost of all customizations is required to be included in the Commercial Bid and the
Bank will not make any additional costs for this throughout the term of the contract if the
same has been specified as a requirement of the Bank in this RFP. Thus, this is a fixed
bid and all necessary customizations based on the functional requirements specified in the
RFP will need to be conducted by the Bidder.
iv. Bidder needs to give detailed plan for customization. All customization has to be
completed within the project timelines.
Integrated Risk Management Department, The South Indian Bank Limited.
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v. The Bidder should ensure that the quality assurance and development standards outlined
in the development methodology of the EWIRM solution are adhered to and required
functionalities/reports related to same are generated and shared with the Bank team on a
regular basis
vi. Enhancements provided by the Bidder would include changes in the software due to
statutory and Regulatory changes and those required due to changes in industry practices
in India and/or abroad or any other requirements of the Bank related to the above, which
will need to be provided at no extra cost to the Bank for the entire period of the contract.
It will include, but not limited to, all the functionalities mentioned in the Functional
Requirements and at no additional costs.
vii. Before completing this phase, the bidder shall ensure that EWIRM solution/ architecture
proposed to be implemented/laid down is capable of meeting all functional and technical
requirements specified in this RFP.
 Testing
i. The Bidder will be responsible for conducting system integration testing to verify that all
system elements have been properly integrated and that the system performs all its
functions.
ii. The Bank will conduct a “User Acceptance Test” (“UAT”) under guidance, review and
Supervision of the bidder to ensure that all the functionality required by the Bank as
mentioned in this RFP is available and is functioning accurately as per the expectations of
the Bank. Consequent to UAT, if some of the functionalities, specified in this RFP are not
present in tune with the Bank‟s expectations, the bidder shall make appropriate changes.
iii. Bidder will be responsible for setting and maintaining the test environment during the
entire period of project implementation. The bidder will ensure that test environment‟s
configuration and parameterization for conducting the UAT is in line with bank's risk
management framework and this RFP‟s requirements. The bidder shall ensure that the
test environment has the same configuration and functionalities as that of the production
environment.
iv. The Bidder will provide the scenarios for UAT and assist in preparing test cases
including the test data to support all the Business scenarios. The Bidder should dedicate
resources to work with the Bank‟s project team for this purpose.
v. The Bidder will assist the Bank in analyzing / comparing the results of testing.
vi. Bidder shall provide adequate resources for trouble-shooting during the entire UAT
process of the Bank.
vii. The Bidder will be responsible for maintaining appropriate program change control and
version control of the system as well as documentation of UAT and change of
configuration and parameterization after making changes in the system.
viii. All errors, bugs enhancements/ modifications required during and after testing will be
resolved within the overall timelines for implementation
Integrated Risk Management Department, The South Indian Bank Limited.
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ix. The Bidder will be responsible for using appropriate tools for logging, managing,
resolving and tracking issues and its progress, arising out of testing and ensuring that all
issues are addressed in a timely manner to the satisfaction of the Bank and as per
requirements mentioned in this RFP.
 Training
i. The Bidder shall be responsible for training the employees of the Bank in the areas of
system administration, implementation, use / operations, management, database
management, error handling /troubleshooting, etc. of the EWIRM Solution.
ii. Structure of the training program covering number of trainings, locations and number of
participants etc. is to be advised by the bidder in writing.
iii. Bidder will also be responsible to develop training and reference materials for all the
functionality of the software. Training / reference materials should be designed separately
for operational staff / user, IT department and senior management. Training material
should comprehensively cover all the functionality of the proposed EWIRM solution and
be written in a user friendly manner with use of graphs, processes flows, screen-shots of
the actual system functionality etc.
iv. Bidder should provide Bank specific training material designed considering its
requirements in this RFP. Training material so provided will be subject to review and
sign-off by the Bank as a project deliverable.
v. The training should at least cover the following areas:
• Functionality available in the solution including logic and methodology of the same;
• Customization / Parameterization;
• Techniques for Slicing and dicing of data, information, and output
• Auditing techniques including generation of audit trail reports;
• Advanced trouble shooting techniques;
• Techniques for generation, view and reporting of intermittent results;
• Deployment of various processes, risk reporting and identification procedures,
Application of controls, analysis procedures provided as part of the solution;
• Techniques of Customization, development and configuration of required reports
including ad-hoc reports from the solution provided;
• Development and deployment of new functionalities using the proposed solution;
• System & Application Administration such as creation of user, user groups,
assigning rights, System Information Security Settings etc.
• Perform Impact Analysis using the solution;
• Business use of the solution
• Technical training to be provided to IT staff of the Bank, and this shall include
installation, technical architecture, configuration & setup , customization, report
generation, backup and recovery, trouble shooting, data synchronisation,
file uploads etc.
vi. The successful bidder is responsible for conducting training sessions for officers of risk
Integrated Risk Management Department, The South Indian Bank Limited.
Page 22
management Dept, branches, Treasury Dept, International Banking Division and regional
offices. Notwithstanding what is contained in point no (ii) above, the minimum number
of training sessions shall be decided by the Bank and the successful bidder is bound to
oblige.
vii. As per the requirements defined in this RFP, Bank may increase more areas of trainings
which bidder would be liable to provide, without any additional cost.
 Implementation
i. The proposed solution should cover all the existing branches/Regional
offices/administrative offices as decided by the Bank and have the capability to scale up
for meeting future requirements. The solution should be scalable and capable to handle
increased volumes. In the event the Bank adds/changes/updates source/core Banking
systems in the future the solution should be flexible to handle such new source systems.
ii. Computation of regulatory and economic capital requirement for Credit, Market and
Operational Risk under Basel- II and Basel- III
iii. Generation of required reports (to be specified under functional requirements of RFP)
iv. Setting up of User Acceptance Test Environment, Live System and Disaster Recovery
System
v. To assist in obtaining any approvals from regulator or registration with any statutory
Body, if required, regarding the implementation of EWIRMS
vi. The Bidder will have to provide the necessary interface not needing manual intervention
to all the applications as required.
vii. At present, the Bank has various solutions running on both Windows and RISC platforms
with Oracle and SQL Server databases. The solution provided shall be capable to
integrate with these databases directly. Ultimately, the EWIRM Risk Solutions shall be
linked to Enterprise Data Warehouse (as and when operational). The solution should be
able to seamlessly integrate with upcoming Enterprise Data Warehouse and shall function
as a Data Mart to the EDW. The proposed solution should be compatible to the following
platforms i.e. Windows, Unix and Linux with Intel and/or RISC systems.
viii. By means of diagrammatic / pictorial representations, the Bidder should provide
complete details of the hardware, software and network architecture of the EWIRM
Solution (module and sub‐module wise), including source / method of Data capture and
transfer, validation, updating and database maintenance for networked branches. In this
regard the bidder should also provide logical architecture and high level diagram of
hardware/software/network architecture.
ix. The Bidder should assist for implementation in 50 branches/RO /administrative offices
on pilot basis. The Bidder should install and commission the solution and integrate with
the Bank‟s applications at all branches. The branches for pilot implementation would be
decided by the Bank.
x. The system should be implemented in all the remaining units after its satisfactory
Integrated Risk Management Department, The South Indian Bank Limited.
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xi.
xii.
xiii.
xiv.
xv.
xvi.
xvii.
xviii.
xix.
working in 50 branches/R.Os/administrative offices and implementation in all the units
should be completed within 12 months from the date of signing of contract.
The Bidder should recommend the operating system, hardware, database, data replication
requirements (at the end of day) along with data replication solution and a required Test
server for EWIRM solution. EWIRM solution comprises of CRMS application software,
ORMS application software, MRMS application software, Integrated Capital
Computation and Reporting module application software and other necessary software
for the successful implementation of the proposed solution.
Firewall & Network Security will be provided by the Bank. The Bidder has to ensure that
vulnerabilities at application level in case of any breach shall be handled by the offered
application software. However the desired requirements of the Firewall and Network
Security should be specified by the bidder.
The total storage provided/ proposed by the bidder shall take into account incremental
growth of the Bank on a minimum, over the next 10 years. The Bidder may propose an
appropriate storage to meet the requirements as found suitable
A complete quote for the hardware required for the successful operation of the Solution
should also be provided by the Bidder, with full particulars like make, model, part
numbers, proposed configuration, including all details like memory type proposed with
future expandability, processor type, number of processors, processor speed, bus speed,
etc. and clearly show no single point of failure.
The Bidder should specify the hardware requirement taking into consideration the
efficiency level, response time, data processing requirement, number of users, and all
other parameters to ensure that the efficiency of software system is not affected because
of hardware. Bidder should provide details for DR site such as network and security
requirements, switches, routers etc.
The Bidder will certify that the hardware specified is adequate for meeting performance
standards set by the Bank.
The Bidder must ensure no software, for which „End of Sale‟ has been declared or will be
declared in next 7 years, is offered as part of this bid. None of the software should have
an „End of Support‟ mandated by the respective OEM within seven years from date of
completion of the project and the bidder should ensure continuity at all times without
disruption of operations.
The Bidder should also recommend the Bank with the number of racks required for the
servers / equipment and associated infrastructure, as well as power requirements
(average, peak and rated power) and any other specific requirements for the servers /
equipment (Network and security requirements, switches, routers etc.) and associated
infrastructure for both DC (Data Centre) & DR (Disaster Recovery) sites.
Sizing of equipment, hardware etc. as required, depending on the functionalities required
by the Bank as mentioned in the RFP, should be provided by the Bidder for processing of
existing portfolio of the Bank with increase in volumes at approximately 25% p.a. and
addition of new products/instruments and data maintenance for a minimum period of 7
Integrated Risk Management Department, The South Indian Bank Limited.
Page 24
years as per RBI guidelines.
xx. The Bidder has to give an undertaking to implement the solution at any location / branch
identified by Bank at no extra cost.
xxi. As part of implementation all data migration (as and when required) from the existing
systems to the system proposed will be done by the Bidder. The Bidder shall demonstrate
to the satisfaction of the Bank regarding accuracy and comprehensiveness of the data
migrated to the proposed system.
 Facilities Management Services (FMS) and Helpdesk
i. The Bidder is required to provide Helpdesk services till the completion of the
implementation across Bank. Facility Management services will be provided by the
bidder till the end of the project and thereafter. The bidder is required to indicate the
resource requirements for FMS in the Annexure-12.
 Facilities Management: Facilities Management would include support for all application
software, provided by the Bidder. Bidder should elaborate on FMS like number of
resources to be deployed post implementation and detail it accordingly in Annexure-12.
FMS services should be provided for entire project duration and thereafter. The resources
for facility management shall be deployed on site till „GO LIVE Date‟ and for the
remaining duration of project the FMS shall be provided from offsite.
 Helpdesk: Helpdesk refers to availability of resources to record and respond to events
and Incidents related to the application, hardware & software implemented as per the
scope of this RFP. Helpdesk services should be provided till GO LIVE Date. At any point
of time during the day a minimum of two resources shall be available.
ii. Uninterrupted services of helpdesk shall be available to all the branches through their
respective working hours.
 Information Security
i.
ii.
System should have standard input, communication, processing and output validations
and controls. System hardening should be done by bidder. Access controls at DB, OS,
and Application levels should be ensured in compliance to the Information Security
Policy of the Bank.
The system should be in compliance with the recommendation of Gopalakrishna
Committee.
V. FUNCTIONAL REQUIREMENTS FOR CREDIT RISK
The Bank aims to migrate to the Internal Ratings based Approaches (IRB) for Credit risk as per
Basel II, Basel III and RBI guidelines. The solution should support estimation of all risk
components and capital calculations (regulatory & economic) as per the guidelines issued by
Integrated Risk Management Department, The South Indian Bank Limited.
Page 25
RBI and Basel under the standardized and IRB approaches. The solution should be able to meet
the Pillar I, II, III and stress testing requirements as per Basel-II / RBI guidelines and Basel-III
guidelines. The solution should be capable of supporting all the required statistical, analytical,
risk modelling, pricing and reporting requirements.
Sl. No Credit risk Functional requirement
A
Standardized Approach
1
Bank data to Basel II Data Mapping*
The system should provide graphical user interfaces (GUI) to map bank data to Basel
II data. The following activities should be supported (but not limited to ):
a.
Bank customer types to Basel II customer types
b.
Bank product types to Basel II product types
1.1
c.
Bank security/collateral types to Basel II collateral types
d.
Bank asset type/guarantor type to Basel II asset/guarantor type
e.
The software should be flexible for the business user to use multiple factors
such as customer constitution code, product type, exposure amount, legal status etc to
perform Basel II asset classification.
The user should be able to view the entire asset classification schema and it should be
1.2
printable to be submitted for regulatory inspections and audits.
*The mapping should be done with respect of both IRB and standardized approaches
2
External credit ratings
The system should have the ability to map the domestic and international rating to the
2.1
corresponding risk weight for all the asset class as specified under RBI Guidelines.
The system should be able to capture multiple rating details for the
obligors/exposures and risk weight assignment should happen as per RBI Guidelines
2.2
(i.e. If two ratings are available then the one with higher risk weight should be used,
and if more than two ratings are available then the lowest of higher two risk weights
should be used).
The system should support a user configurable interface with which multiple ratings
2.3
can be assigned for obligors/exposures.
The system should capture external rating details such as Rating Agency, Rating,
Type of Rating (Long or Short Term, Issue or Issuer Rating), and Rating Date etc.
from the Credit rating Software. Based on this information, the system should
2.4
determine the eligibility of external rating for use in capital computations based on
the rules specified in the RBI guidelines.If external rating details are not present in
CRS, the system should permit the direct keying in of data.
3
Credit Risk Mitigation
The system should have the ability to map the Collateral/Security Types (which the
3.1
bank uses for internal reporting) into collaterals types as per RBI Guidelines (Cash,
Gold, KVP, Life Insurance, Debt Securities, and Mutual Funds etc).
Provide a GUI to define the hair cuts for various collateral types as defined in RBI
3.2
guidelines.
The system should be able to apply supervisory haircut on exposures and mitigants,
3.3
and compute capital after applying Credit Risk Mitigation techniques as per RBI
Guidelines.
Integrated Risk Management Department, The South Indian Bank Limited.
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3.4
3.5
3.6
3.7
3.8
3.9
3.10
4
4.1
4.2
4.3
4.4
4.5
4.6
4.7
The system should have the ability to assign the risk weights for Guarantors as per
RBI Guidelines.
The system should be able to capture the relevant data fields for Currency and
Maturity Mismatch calculations and should also be able to apply the haircuts as per
RBI Guidelines.
The system should be able to capture collateral which is a basket of collaterals and
should also be able to calculate the haircut on the basket of collateral. Haircuts
applicable on the basket of assets should be taken into account while calculating the
capital as per RBI Guidelines.
The system should be able to perform on balance sheet netting and capital calculation
based on the net credit exposure
The system should be able to apply haircut scaling formula (based on holding period
and frequency of /revaluation period) as prescribed by RBI Guidelines.
The system should be able to capture guarantee, counter guarantee and credit
derivative details
The system should have the ability to perform optimal allocation of collateral when
one or more collateral/guarantee is mapped to multiple exposure (many to many
relationship). The user should be able to view and modify the objective equation and
the constraints
CRAR computation
The system should have a user interface to capture the minimum Capital to Risk
Weighted Assets Ratio (CRAR) prescribed by the RBI.
The system should be able to capture and classify the regulatory retail exposures
based on the qualifying criteria's such as Granularity, Orientation, Product and Low
Value of Exposure
The system should be able to capture the aggregate exposure for Corporate, and the
risk weight should be assigned as per RBI Guidelines
The system should provide GUI based screens to define the capital computation rules
for the following areas based on RBI guidelines:
Corporate, Banks, Domestic Sovereigns, Foreign Sovereigns, Public sector entities,
Multilateral development banks, BIS, IMF, Indian Banks, Foreign Banks, Primary
dealers, Corporate, Retail (Regulatory Retail, Home Loans, Consumer loans),
Commercial Real estate, NPA, Venture Capital, Other assets, Off-balance sheet assets
and any other asset classification which RBI may come up from time to time
Assign Credit Conversion Factor's(CCF's) for off-balance sheet items, undrawn
portion of revolving loans as per RBI Guidelines
The system should be able to capture Failed Trades ('Delivery versus Payment' and
'Non Delivery versus Payment', i.e. unsettled securities and foreign exchange
transactions) and should be able to calculate capital as per RBI Guidelines
The system should compute CRAR under standardized approach
The system should compute and report the gross exposure, value of risk mitigants, net
exposure, risk weight and minimum capital charge under Basel-II/Basel- III for each
account.
The system should report the risk weighted assets and capital charge under each asset
category as defined in Basel- II norms and at account level.
Integrated Risk Management Department, The South Indian Bank Limited.
Page 27
B.
1
1.1
1.2
1.3
1.4
1.5
1.6
1.7
1.8
1.9
1.10
1.11
2
2.1
2.2
IRB Approach
Internal Rating System (applicable to all types of credit and investment
exposures)
The proposed software solution should have flexible user interface, capable of
interfacing with existing and future credit rating systems of the bank
The proposed software solution should provide a statistical package / tool for credit
risk Model Development and Validation.
The proposed software solution should have flexibility to add any number of rating
models and scorecards in future.
The system should have capability and statistical tools to create expert judgment,
statistical and hybrid type of rating models/ score cards.
The solution should fulfil requirements of Working Paper 14 of BCBS document for
the validation of the rating systems.
The model validation solution should be able to perform validation of:
Internal rating system for various portfolios
Scoring models and Probability of Default („PD‟) models (retail, corporates,
sovereign,equity and banks)
Loss Given Default („LGD‟) models (retail, corporates, sovereign and banks)
Exposure at Default („EAD‟) models (retail, corporates, sovereign and banks)
The system should have capability to generate reports pertaining to any kind of model
development and/or validation of rating models
The system should be able to compute PD, LGD, CCF, M and capital calculations for
the relevant asset classes as per FIRB and AIRB approach as per Basel II Guidelines.
The system should be capable of computing PD for each borrower rating grade, LGD
for each facility rating grade and EAD for each facility in case of corporate
System should support the PD modelling methods for corporate exposures, including
but not limited to the following methods:• Historical data based
• External rating mapping approach (in case of large corporate)
• Statistical PD model based approach (in case of SME)
The system should support statistical modelling to enable the users to develop and
deploy their own models for risk parameter estimation. The following statistical
modelling features should be supported (at minimum):
• Sampling techniques (Simple, stratified, random etc)
• Missing value imputation
• Outlier detection and elimination
• Variable transformation
• Regression modelling (Simple, Multiple, Logit, probit, GLM, GLMM etc)
Corporate, Sovereign and Bank Asset Class Models
System should have ability to track and store account-wise /customer-wise previous
credit ratings/ scores and LGD. The system should also capture date of rating, type of
rating, rating model and other related information.
System should enable the user to define multiple portfolios or asset classes based on
multiple dimensions (such as borrower constitution, industry, product type, loan
amount etc but not limited to) and associate borrower rating model and facility rating
models to the user defined portfolios.
Integrated Risk Management Department, The South Indian Bank Limited.
Page 28
2.3
2.4
2.5
2.6
3
3.1
3.2
3.3
3.4
3.5
System should have a capability to take data related to balance sheet, profit & loss
and cash flow statements from pre‐defined Excel sheets and other data formats (viz.
.txt, .XBRL, .CSV, .XML)
The system should be able to capture and receive the required data (Data entry, File
uploads, direct transfers, batch processes, etc) from various source systems like Core
Banking Solutions, Internal Rating models in various formats (viz. .txt, .XBRL, .CSV,
.XML, excel, PDF etc) and capital calculations (for all asset classes) as per RBI
Guidelines under Standardized Approach, FIRB, AIRB and all other asset class
specific approaches of Basel-II/ RBI.
The solution should have the ability to map the internal risk grades of the specialized
lending subclasses (PF, OF, CF, IPRE and HVCRE) to supervisory categories as per
Basel-II guidelines.
The solution should be able to support validation techniques, including statistical
tools, for the non retail rating models as per the requirements of working paper 14 of
Basel Committee on Banking Supervision (May 2005) or any modification thereof
and generate reports for the same for management oversight and effective portfolio
management. The system should have the tools to validate credit rating models on
continuous basis. Validation process should enable the Bank to assess the
performance of internal rating and risk estimation methods consistently and
meaningfully. The validation process should help the Bank to meet regulatory
requirements of RBI.
Retail Rating Models
System should have a capability to develop expert defined models/ scorecards,
statistically developed models/score cards and hybrid models and provide application
and behavioural scorecards. The solution should enable the users to input the required
details for application scorecard and compute the application score.
The system should have the ability to capture retail exposures at an account level,
assign each exposure to a particular retail pool based on well-defined risk drivers such
as borrower type, demographics, products, collateral, delinquencies etc. (not limited
to these dimensions) to estimate Pool PD, LGD and EAD. The system should form
Homogenous pools of retail exposures formed in consultation with the Bank in
compliance with IRB guidelines. The system should have capability to integrate
subsequent changes in Pooling criteria.
System should have a capability to compute behavioral score for the retail products as
a whole on a periodic basis. The solution should be capable to interface with multiple
data source systems (such as CBS, FTP) and fetch the required behavioral data and
compute behavioural score of each retail borrower.
The system should have a capability to generate reports and demonstrate that retail
pooling models and methodology are compliant with the minimum requirement of
IRB Approaches as per RBI guidelines.
The solution should be able to validate the retail score card/retail pooling models as
per the requirements of working paper 14 of Basel Committee on Banking
Supervision (May 2005) or any modification thereof and generate reports for the same
for management oversight and effective portfolio management.
The system should be able to compute and validate PD, EAD and LGD for each pool.
The system should provide methodology and tools to validate retail pooling/score
card models on continuous basis.( Validation process should enable the Bank to
Integrated Risk Management Department, The South Indian Bank Limited.
Page 29
3.6
4
4.1
4.2
4.3
4.4
4.5
4.6
4.7
4.8
4.9
4.10
assess the performance of retail pools, risk estimates and risk estimation methods
consistently and meaningfully. The validation process should help the Bank to meet
regulatory requirements of RBI. The vendor should help bank to get it validated
through independent third parties. By independent third parties, we mean parties
unrelated to vendor (not related parties/ subsidiaries, JVs etc) with satisfactory track
record and past experience in this field. In this regard, vendor should give the bank a
list of independent third parties acceptable to the bank and bank will retain the option
to choose the validation carrying company.)
The system should be capable to capture and receive relevant data from Rating
systems, CBS system etc without manual intervention.
Capital Computation
The system should separately compute RWA under FIRB/AIRB. The solution should
support Multiple Approaches and Multiple Jurisdictions, simultaneously, if required.
The solution should support categorization of asset classes and sub classes as defined
as per IRB approaches as given in the Basel II Accord / RBI guidelines (Corporate,
Sovereign, Bank, SME, SL classes, Retail, QRRE, equity, purchased receivables,
securitized etc.). The system should be capable of computing bank wide and asset
class wise (including sub-categories like product-wise, specialized lending, SME,
vertical wise etc) RWA, EL, UL and Capital (regulatory & economic)
The solution should provide the ability to estimates Probability of Default (PD)/long
run PDs using internal rating grades and default history across all exposure types.
The solution should be capable for computing PD based on Internal loss history,
External rating based, Statistical based approaches as described in the Basel II accord
The solution should be capable of computing Through-the-cycle PD and Point-in-time
PD. The system should be capable to convert a PIT PD to TTC PD and vice versa.
The solution should support estimation of PD for low default and low data portfolios.
The solution should support both the Foundation as well as Advanced approaches for
collection of LGD data components and estimation of facility wise Loss Given
Default (LGD) –both economic LGD and accounting LGD- across all exposure types
(On and Off Balance sheet exposures), both for defaulted/ restructured accounts. The
system should be capable of computing LGD using market based LGD, implied LGD
and work-out method as per the nature, applicability and data availability of credit
risk exposures. Further, the system should be able to drill down the LGD estimation
into industry wise, vertical wise, product wise, workout method wise, year
wise/quarter wise/Other frequencies/, collateral-wise and offer additional drilldown
options and reports. It should also support analytics for estimating PD & LGD
correlation.
The solution should distinguish between senior and subordinated facilities allocating
required LGD to unsecured portion of the facility.
The solution should provide for EAD and Effective Maturity (M) calculation for both
on and off balance sheet items.
The solution should be able to capture all types of risk mitigation inputs and should
have the ability to reclassify/categorize the bank‟s risk mitigation tools into Basel
defined risk mitigation inputs types as per Basel II Guidelines/ RBI guidelines. The
solution should be able to allocate different collaterals to different facilities using
multiple algorithms, approaches (Simple, comprehensive, FIRB, AIRB) and Basel-II
guidelines by RBI. The solution should be able to use double default methodology for
Integrated Risk Management Department, The South Indian Bank Limited.
Page 30
4.11
5
5.1
5.2
5.3
5.4
5.5
5.6
5.7
5.8
5.9
5.10
5.11
5.12
5.13
capital computation.
The system should compute and report the gross exposure, value of risk mitigants, net
exposure, PD, LGD, EAD and minimum capital charge under IRB approach of
Basel-II/Basel- III for each account
Bank data to Basel II Asset Class Mapping
In addition to the eligible financial collateral recognized in the Standardized approach,
the solution should recognize the other eligible FIRB/AIRB collaterals and provide
necessary treatment as outlined in the Basel II accord/RBI guidelines. The system
should allow user to compute value of eligible IRB collaterals (viz. minimum collateralization or over - collateralization or under -collateralization).
The solution should have the ability to compute, make estimates, and apply haircuts
on collaterals and exposures as per Basel-II accord/ RBI guidelines on IRB approach.
The system should be capable of applying a weighted average of haircut if the
collateral is basket of assets.
The solution should make adjustments for different holding periods based on the
quality of collaterals and non-daily mark to market or re-margining.
The solution should provide for effective LGD where the Bank is having other
financial/AIRB collaterals and pool of collaterals.
The solution should provide exposure adjustment by segmenting it into portions
covered by different collateral and guarantee types and portion remaining unsecured
as per Basel-II/ RBI guidelines.
The solution should provide necessary treatment for repo style transactions/
guarantees/ credit derivatives under both foundation as well as advanced approaches.
The solution should be able to generate PD, EAD, LGD for sub-portfolio like
industry, sector, Geography etc.
The system should be able to compute Downturn default weighted LGD/ as well as
per RBI/ Basel guidelines.
The solution should support development of multiple PD, LGD & EAD models and
should enable for validation. The bidder should help bank to get these models
validated through independent third parties. In this regard, vendor should give the
bank a list of independent third parties acceptable to the bank and bank will retain the
option to choose the validation carrying company. Once the bank chooses the
validation carrying company, the vendor has to cooperate with the validation carrying
company and get the validation done. By independent third parties, Bank means
parties unrelated to vendor (not related parties/ subsidiaries, JVs etc) with satisfactory
track record and past experience in this field.
The system should provide statistical tools such as, HHI Index, Gini co-efficient,
Cumulative Accuracy profile, Receiver Operating Characteristic (ROC), etc.
The system should have the ability to capture and map PD, LGD, EAD and Maturity
for the FIRB/AIRB asset classes and apply the same in capital calculations.
System should generate transition matrix for multiple period. Transition matrix should
be generated for asset classes, industry/region/country/product/business segment etc
The system should be capable of performing pooling based on statistical analysis,
application/ behavioral scores and expert judgment. At a minimum the system should
support clustering techniques such as CART, CHAID and regression trees etc. The
logic of pooling should be configurable in the system. The pooling logic is subject to
change on at least at a yearly basis. Hence the definition of pooling logic should be
Integrated Risk Management Department, The South Indian Bank Limited.
Page 31
5.14
5.15
5.16
5.17
5.18
5.19
5.20
5.21
5.22
5.23
5.24
5.25
5.26
5.27
5.28
5.29
5.30
through a graphical user interface and should not require any programming or vendor
assistance. The system should have the capability to validate retail pools and generate
reports (as per the requirements of working paper 14 of Basel Committee on Banking
Supervision or any modification thereof).
System should generate correlation matrix for industries, ratings, zones, facility etc.
The system should have the provision to run FIRB/ AIRB approach for certain asset
classes and Standardized approach for other asset classes in the same execution.
The system should be able to store data for minimum seven years across all asset
classes, which in turn can be used for modeling the IRB risk components.
The system should be able to store minimum seven years of data for PD, LGD and
EAD modeling.
The system should be able to store the data for at least seven years at an
account/transaction level to perform the pooling process.
The system should have the ability to assign/map new exposures into the created
pools.
The system should generate reports to monitor/track pool stability and accuracy.
The system should be able to perform firm-size adjustment for small and medium size
entities.
The system should be able to apply double default treatment for the hedged portion
and guaranteed portion and compute capital requirement for double default.
In case of maturity mismatch for double default transactions and other transactions,
the system should be able to perform the maturity adjustment as per Basel II
Guidelines. The system should be able to do calculations for currency mismatches
also.
The system should be able to perform capital calculation for equity exposures via the
following approaches:
• Market Based Approach
• Simple risk weight method
• Internal Models Method
• PD/LGD Based Approach
The system should support VaR model (99th percentile, one tailed), i.e. the system
should have the ability to build VaR Model. The system should be able to take the
equations as per regulatory formulas and perform capital calculations.
The system should be able to support an interface with Treasury systems from where
the VaR numbers can be fetched.
The system should be able to calculate capital charges for default and dilution risk for
purchase receivables (corporate and retail exposures).
The solution should provide methodology for computation of Expected Loss (EL) and
Unexpected Losses (UL), RWAs for Credit risk under both foundation as well as
advanced approaches.
The solution should provide calculation of best estimate of Expected Loss; compute
RWA, capital for defaulted/NPA exposures as per RBI/ Basel IRB approaches.
For Default risk, the system should be able to apply Top-down Approach or Bottom
up Approach for both corporate and retail exposures (purchase – receivable asset class
wise). Also based on the exposure type, the system should be able to apply retail or
corporate risk weight functions to arrive at the default risk weight.
Integrated Risk Management Department, The South Indian Bank Limited.
Page 32
5.31
5.32
5.33
5.34
5.35
5.36
5.37
5.38
5.39
5.40
5.41
5.42
6
6.1
The system should be able to calculate capital for Traditional and Synthetic
Securitization exposures.
The system should be able to capture the bank‟s role (e.g. Originator, investor etc) for
the securitization exposures, various credit enhancements and should calculate the
capital as per Basel II Guidelines.
The system should have CCF's models and calculate capital for securitization
exposures with early amortization features.
The system should be able to apply the supervisory formula for capital calculation of
Securitized Exposures as per Basel II / RBI Guidelines.
The system should be able to capture Failed Trades ('Delivery versus Payment' and
'Non Delivery versus Payment') i.e. unsettled securities and foreign exchange
transactions) and should be able to calculate capital as per Basel II Guidelines.
The system should be able to perform Stress testing and Back testing, which will
allow Justification of the capital computation for all the asset classes.
The system should have the ability to perform the stress tests (for all the asset classes)
for PD, LGD, EAD, CCF and Maturity. System should be able to Simulate stress test
on various parameters like PD, EAD, and LGD for Capital requirement & RAROC.
Examples of scenarios that could be used are:
• Economic or industry downturns
• Market Risk events
• Liquidity conditions
• Bank specific scenarios
System should be able to generate alerts for initiating management action in case of
stress situation.
Bidder should independently develop and validate the required models for PD, LGD,
EAD, CCF and Maturity for on and off-balance sheet exposures.
For estimation of EAD & CCF, it should also do undrawn analysis, UGD analysis etc
and generate reports.
The system should be able to define portfolio based upon the following aggregation
possibilities such as:
• Counter-party or combination of counter parties
• Industry
• Tenor
• Product
• Geography
• Issuer
• Credit rating
• Any internal hierarchy
And should allow drill down capabilities up to transaction level.
The system should be able to perform portfolio analysis by fixing and measuring
exposures and limits inclusive of correlation effects within portfolio parameters. This
should be in line with the Basel /RBI guidelines on correlation measurement such as
Default/Asset Price correlation.
Reporting
The system should be capable of generating various Bank- defined reports like:
(System should have the capability to generate back dated reports)
Integrated Risk Management Department, The South Indian Bank Limited.
Page 33
6.2
6.3
6.4
6.5
6.6
6.7
6.8
6.9
6.10
6.11
6.12
6.13
6.14
6.15
6.16
6.17
6.18
6.19
6.20
6.21
6.22
6.23
6.24
6.25
6.26
• Borrower Information report
• Industry Analysis report
• Monitoring (Account-wise report to cover rating transition & trend in critical
identified parameters)
• Peer group Analysis report
• Rating wise reports
• Portfolio reports
• Borrower-wise risk score report
• Borrower-wise risk grade report
• Borrower-wise year wise risk score report
• Borrower-wise year wise risk grade report
• Industry Concentration Report
• Industry- wise risk score report
• Industry- wise risk grade report
• Region wise Concentration Report
• Region wise risk score report
• Region - wise risk grade report
• Quick mortality Report
• Defaulted Account Report (Grade wise/ Industry wise/ year wise/ ownership wise/
size wise/ on-balance sheet/ off-balance sheet exposure wise for a date range etc)
• RAROC reports- vertical wise, geography wise, rating grade wise etc.
• Capital Charge-credit risk (Regulatory and economic) – expected and unexpected
losses
Exposure Reports:- Such reports generally include
The break up of total exposure based on Sector, industry, credit rating, Client, Loan
Size, Maturity, country, currency, on-balance sheet off-balance sheet exposure,
interest rate wise, floating rate wise, internal and external benchmark, fixed rate wise
etc.
The report giving NPA position separately under each of abovementioned categories
along with reports on accounts which have been upgraded from NPA and which have
slipped to NPA from standard,
The report showing position of restructured accounts under each of abovementioned
categories along with reports on accounts which have been upgraded from
restructured and which have slipped to NPA from restructured status etc
Report on restructured exposures, repeated restructured accounts and drill down
options like industry-wise, rating-grade wise, curing-wise, tenor wise, sacrifice wise,
product-wise, vertical-wise, region-wise, branch-wise, asset class-wise.
The reports should be able to cut across asset classes and give combined reports, if
needed, while analyzing industry-wise, product-wise, sector-wise reports (e.g.:
exposure to cement industry report should combined and render a consolidated report
on all exposures under various asset classes)
Collateral Reports (Collateral wise exposure report (total exposure after netting that
is covered by 1. eligible financial collateral 2. other eligible AIRB collateral 3.
guarantees etc). including current market value of collateral wherever applicable as
per policy of the Bank
Integrated Risk Management Department, The South Indian Bank Limited.
Page 34
6.27
7
7.1
7.2
7.3
7.4
Exception reporting:
• System should provide ability to monitor post facto limit exceptions, System
should be generate a list of accounts which are due for rating (i.e pending list of
accounts which are not rated in accordance with Bank‟s policy)
• System should be able to track and indicate loans contract expiring but still
unsettled
• System should be able to track exceptions for loans in which collateral coverage
falls below the required level
• System should be able to track exceptions for exposure exceeding the limit at
facility level
• System should be able to track exceptions for overdue for e.g. overdue for
principal, interest amount etc
• System should support tracking and breach generation of loans pending for
renewal
Collateral Management
The solution should have facilities for extracting, displaying and exporting the
following details, but not limited to, from the source systems (or enterprise data
warehouse as and when functional) vide user defined reports or system triggered
alerts
Collateral and Guarantor details
• Nature/description of collateral securities
• Data points to enable classification of collateral in to IRB eligible collateral as per:
• regulatory considerations along with classification outcome
• Collateral(s) and the list of related facilities
• Legal relationship between collateral provider and borrower
• Personal / Corporate guarantor information including means/net worth of
guarantor
Collateral Valuation
Valuation details including date of valuation, name of valuer, next valuation due
date, frequency of valuation based on type of collateral and margin details
Guarantees accepted /credit default swaps purchased by the Bank:
• Data points to assess eligibility of the same as means of credit protection along
with existing status of eligibility for capital relief under IRB regulatory guidelines
prescribed.
• Details of the guarantee taken as part of the loan including comprehensive details
of the guarantor(s).
• Value of the guarantee/CDS including the % of facility covered and exclusions in
guarantee/CDS agreement.
• Linkage between the guarantees and its facilities.
Collateral documentation and storage:
• Details of documents to be collected as per the legal opinion, name of the
empanelled lawyer providing opinion, etc. along with details of those already
collected- list of documents to be given by Legal Dept
• Details of the legal documents actually collected for each product type.
• Storage/despatch details of the documents of title to securities.
• Work flow Status for monitoring of the movement of the security documents from
Integrated Risk Management Department, The South Indian Bank Limited.
Page 35
7.5
7.6
7.7
7.8
8
8.1
8.2
8.3
8.4
the storage till the final release to the customer.
Legal aspects of collateral:
• Details of legal documentation collected pertaining to the facility including
deviations if any.
• Information from external sources like Ministry of Corporate Affairs, central
registry of properties.
Insurance:
• Details of the security- insurance company, validity of the policy, exclusions from
the policy, insured amount etc.
• Providing alerts when insurance pertaining to a collateral falls due for expiry
Expiry reports on collateral (Due for expiry/expired)- bank/region/branch/account
wise
Others:
• Details for treatment of pools of collateral, maturity and currency mismatches.
• Details of the actual realisation value during sale/auction of securities when they
are classified as NPA.
• Associated costs related to sale and recovery such as but not limited to legal costs,
administrative costs, haircuts and other disposal costs and related time for
completing sale of assets
Credit Risk Stress Testing and Event Identification
The system should have the capability to create, edit and maintain a scenario library
containing both bank-wide and business unit specific scenarios with assumptions,
portfolios and considered exclusion etc.
The system should have the ability to execute stress tests at a portfolio (or exposures
at a bank level) or a sub-portfolio or transaction level and should provide ability to
capture supporting information such as:
• Scenario description and key assumptions.
• Macroeconomic and industry specific data for specific stress testing themes based
on particular business groups and pre-defined scenarios.
The system should have the following capabilities with respect to the requirements
for Stress Testing:
• The system should have the ability to set triggers for industries based on
predetermined thresholds for Key Risk Indicators (KRIs) to alert the IRMD for
initiating stress tests.
• The system should have the capability to link the primary industries with the
identified ancillary or second-order industries based on correlations.
The credit risk stress testing module should support quantifying the impact of stress
scenarios on the following performance measures at the Bank level and for sub
portfolios (e.g. Corporate loans, Treasury Portfolios, etc.):
• Expected loss;
• Provisions on defaulted exposures;
• Unexpected loss;
• Risk weighted assets;
• Profitability;
• Growth in Non-Performing Assets on selected portfolios
• Growth Rates of the bank across Core Industries
Integrated Risk Management Department, The South Indian Bank Limited.
Page 36
8.5
8.6
8.7
8.8
8.9
8.10
8.11
9
9.1
• Total Income of the Bank
• Economic capital; and
• Capital Ratios (e.g. CRAR)
• Other parameters as decided by the bank
The system should support facility by facility and/or higher level portfolio or
geography level stress testing to exposures and credit risk parameters, as part of
overall stress testing scenario.
System should capture the management action recommended for the scenarios based
on the severity of the results of the scenarios.
The system should provide ability to compare the following measures for base and
stressed conditions: exposures, credit risk parameters and resulting capital and loss
estimates.
System should provide ability to apply stress test scenarios for the current as well as
simulated portfolios of the Bank.
The system should be capable of performing/supporting reverse stress testing
including linking potential scenarios to targeted capital or tail losses
System should have the ability to connect with authentic external sources to extract
information on economic factors, industry trends etc.
Based on extraction of data, the solution should be able to:
• Aggregate credit exposure and credit equivalents for non-funded products
including derivatives and other market based product exposures based on rules.
Maintain different rules for credit exposure aggregation for different purposes (for
e.g. regulatory capital purposes vs. economic capital calculations) and utilisation
visà- vis risk based limits.
• Ability to measure and distinguish direct, indirect and contingent exposure for
various portfolios and sub portfolios (e.g. borrower, borrower groups, industry,
country, product group, geographical clusters etc).
• Ability to aggregate and consolidate credit exposures across domestic and
international locations as per prudential norms set out by the regulator(s).
Model Validation capabilities
Solution should contain statistical package to support model validation tests and PD
validation tests such as:
• Discriminatory power test
• Frequency and cumulative distribution graphs for both defaulters and nondefaulters Cumulative Accuracy Profile (CAP) and its summary index, the Accuracy
Ratio (AR) Receiver Operating Characteristic (ROC) or the Area Under Curve
(AUC) and its summary indices.
• the Gini
• KS Statistic
• Pairwise correlations
• Expert ranking correlation
• Kendall‟s τ and Somers‟ D (benchmarking)
• Brier Score
• Calibration accuracy test
• Observed default rates compared to PDs for overall portfolio and at each rating
grade.
Integrated Risk Management Department, The South Indian Bank Limited.
Page 37
9.2
9.3
• Binomial test
• Chi-square test
• Normal test
• Traffic lights approach
• Observed migration compared to projected migrations
• Stability analysis
• Population Stability Index (PSI)
• Rating migration matrix to illustrate rating stability
• Granularity
• Herfindahl Index (HHI)
• Concentration per rating over time
Solution should contain statistical package to support LGD model validation. The
techniques supported shall include but are not limited to:
• Discriminatory Power
• Frequency and cumulative distribution graphs for observed and actual losses per
LGD bucket (or percentile).
• Proxy Gini measure
• Pair-wise correlations
• Calibration
• Observed loss rates compared to average predicted LGD for the overall portfolio
and per loss bucket (or percentile)
• Applying ordinary least squares to fit the best linear regression, compare the
observed versus the predicted LGD
• R-squared, Correlation Observed versus predicted: recovery rate, cure rate,
collateral values post default,time to default, recovery costs
• Stability
• LGD migration between buckets (or percentiles)
• Population stability index of: Key risk drivers including recoveries, collateral
values (pre and post default), recovery cost, cure rate and time to default and Overall
output
• Granularity
• Herfindahl index
• Concentration per LGD bucket (or percentile) over time
Solution should contain statistical package to support EAD model validation. The
techniques supported shall include but are not limited to:
• Discriminatory Power
• Frequency and cumulative distribution graphs for observed and actual EADs.
• Calibration Accuracy
• Test if the average observed EAD equals the average predicted EAD
• Applying ordinary least squares to fit the best linear regression, compare the
observed versus the predicted EAD
• R-squared, Correlation
• Stability
• EAD migration between buckets (or percentiles)
• Population stability index of overall EAD outputs
Integrated Risk Management Department, The South Indian Bank Limited.
Page 38
9.4
10
10.1
10.2
10.3
10.4
10.5
10.6
10.7
10.8
10.9
10.10
10.11
10.12
10.13
The solution should include/support corporate and macro-economic variables
included in the pre-defined mart, allowing their use in models namely Altmans Z
through variables definitions and Pluto-Tasche method for LDP‟s
Credit Risk based Pricing
The system should support enable computation of Risk based Pricing as per the
methodology defined linking it to the Rating grades and the PD bands separately for
retail and corporate accounts.
The system should be able to aggregate cost of funds, operating expenses, cost of
capital and other costs, spread and risk premium as calculated using PD and
assumed LGD values.
The system should embed standard pricing calculations and policies into the loan
origination workflow, and understand the impact of each deal on the shareholder
value.
System should allow monitoring of deals that have been approved by the business
below the hurdle rate defined by the bank. This should include details such as reason
for override, amount of override, approver, relationship manager etc., along with
complete documentation on workflows and pricing calculations to assist in
improvement of the pricing process.
System should capture audit trails to satisfy regulatory requirements that the risks
inherent in loan products and services have been adequately accounted for in the
pricing of loans.
System should have adequate controls to ensure that loan pricing practices comply
with bank policies and strategy including authorization and also facilitate adequate
reporting to appropriate levels of all exceptions.
The tools for arriving at RAROC and Risk based pricing basis Regulatory and
economic capital to include all relevant relationship components (revenues and
expenses) and also carry capability to depict future profitability/returns
The comparison of pricing for different customer views e.g. industry, product,
geography, business unit, related MIS and reporting on the corporate portfolio
should be enabled at the Head office level
The system should enable branch / Relationship managers to price deals, offer,
alternatively deal structures, and respond to customer requests by direct input of
necessary details.
The system should calculate a price based on a target performance metric and
recalculate performance if a price override is granted
System should provide complete flexibility and control. It should pull in data from
third-party systems and internally built tools, as well as adjust the data to create a
differentiated pricing approach. It shall also retain audit trail
The system should have the flexibility to compute Risk-Based Capital (Capital at
Risk or Economic Capital) calculations based on aggregation of:
• Value at Risk
• Expected and unexpected losses from exposure, default rates and recoveries
Calculation of Risk Adjusted Return on Capital (RAROC) based on regulatory
capital as well as economic capital. The system should be able to calculate capital
requirement individual account wise and also units-wise such as:
• Entire Bank
Integrated Risk Management Department, The South Indian Bank Limited.
Page 39
10.14
10.15
10.17
10.18
11
11.1
11.2
11.3
11.4
• Region/zone
• Geography
• Industry
• Business segments
• Products
• Rating wise
• Branch
• Relationship Manager – Branch Manager/Field Functionary
• The system should be able to compute RAROC and SVA for each facility on an
ex-post basis. The RAROC and SVA should also be computed for each user defined
portfolio. (For example, Corporate Portfolio, Home Loan Portfolio, Rating grade ,
etc )
• The system should be able to interface with FTP system to fetch the cost of funds.
• The system should be able to compute the risk premium to be charged at a rating
grade level, product level and transaction level based on incremental capital required
to fund the transaction
The system should be able to provide risk adjusted performance evaluation. The
evaluation should be across Business Units, portfolios and sub-portfolios. The
system should allow the user to incorporate further evaluation subjects.
The system should allow for input of expert judgement into the performance
evaluation system
The system should have the pre-built templates and should also have the
functionality for a business user to define and customize Credit Risk MIS across all
matrix dimensions such as:
• Counter-party
• Portfolio
• Product
• Geography – country/ state/zone/branch
• Industry
• Concentrations
• Risk Profiles
The solution should be able to generate Risk Profile Template as per RBI guidelines
and other branch-wise risk profile templates for credit risk as per Bank‟s internal
requirements.
Limit Setting and Approval
Provide capability to identify portfolios based on risk profile aggregation along with
ability to define and determine portfolio limits (across various dimensions e.g.
industry, sector, rating group) based on risk based approach (e.g. internal rating
scale)
Be able to develop and support optimization models (e.g. Hill Climbing Algorithms)
to determine credit limits.
Provide workflow mechanism to manage a rule-based limit approval process.
Ability to configure multiple approval workflows depending on business lines,
products and other considerations.
Maintain complete audit trail of the changes made with respect to change/approval
of limits.
Integrated Risk Management Department, The South Indian Bank Limited.
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11.5
11.6
11.7
11.8
11.9
12
12.1
12.2
12.3
12.4
12.5
12.6
12.7
Incorporate the effects of netting agreements, collateral and credit risk transfer
mechanisms (Credit Default Swap (CDS) and guarantees) while computing portfolio
risk for the bank.
Provide ability to calculate credit P/L for the portfolios considering default /
nodefault and rating-transitions.
Provide ability to compute credit portfolio metrics including Expected Loss (EL),
Unexpected Loss (UL), Credit VaR (CVaR) and Expected Shortfall (ES) on
marginal and standalone basis for various portfolios and sub portfolios.
Have capability to capture inputs of bank strategy across parameters such as growth
in exposure to specific sectors, regions, products etc.
Periodic alerts to users when limit is due for review
Exposure Calculation, Aggregation and Concentration Risk
Non-Fund Based Market Related Off balance sheet items
The system should be able to estimate exposure for different purposes:
Regulatory Capital calculations
Economic Capital Calculations
Credit Risk Control purposes (e.g. Limit setting, Concentration monitoring)
System should be able to determine Mark to Market (MTM) or replacement value
using full-revaluation approach for the following set of indicative products:
Derivative products – FRAs, Interest Rate Swaps, Cross Currency Swaps, FX
forward, and FX options;
Equities;
Mutual Fund units;
Corporate Bonds, Government Securities, Hybrid Securities;
Structured notes (e.g. CLNs, CDOs); and
Money market products – Commercial papers, Commercial deposits, repos, reverse
repos
System should provide ability to determine Potential Future Exposure (PFE) for off
balance sheet items including derivatives and other non-fund based banking
products for normal market conditions and stress market conditions. The system
should be able to compute the credit equivalent using current credit exposure
method.
System should be able to determine Potential Future Exposure using different
approaches:
Monte-Carlo simulation based approach.
Credit Conversion Factor (CCF) based approach (MTM + Add-on approach).
Any other relevant advanced methods that are widely in use Internationally
System should provide ability to compute Credit Value Adjustment (CVA) as
prescribed by RBI in Basel-III guidelines.
System should provide ability to compute CVA on marginal basis and standalone
basis at trade level and portfolio levels
Non Fund Based Non Market Related
The system should be able to estimate exposure for different purposes through CCF
estimation:
Regulatory Capital calculations
Economic Capital Calculations
Integrated Risk Management Department, The South Indian Bank Limited.
Page 41
12.8
12.9
12.10
12.11
12.12
12.13
12.14
12.15
12.16
12.17
12.18
Credit Risk Control purposes (e.g. Limit setting, Concentration monitoring)
Based on extraction of data, the solution should be able to:
Aggregate credit exposure and credit equivalents for non-funded products including
derivatives and other market based product exposures based on rules
Ability to measure and distinguish direct, indirect and contingent exposure for
various portfolios and sub portfolios (e.g. borrower, borrower groups, industry,
country, product group).
Maintain different rules for credit exposure aggregation for different purposes (for
e.g. regulatory capital purposes vs. economic capital calculations) and utilisation
visà- vis risk based limits.
Ability to aggregate and consolidate credit exposures across domestic and
international locations as per prudential norms set out by the regulator(s).
The system should be able to Support measurement of concentration risk across
different categories of exposures, for e.g. Top 20 single borrowers, Top 10 group
borrowers, Top 20 depositors etc
Model risk correlations among different borrowers /sectors /industries, etc. and
factor it in concentration risk management
Measure concentration risk using different measures, for e.g. Lorenz Curve,
Herfindahl-Hirschman Index (HHI), Gini coefficient.
Measure diversification benefit on a dynamic basis for the bank on a standalone and
consolidated basis
Integration with loan proposal and review systems for monitoring concentration
prior to sanction.
Provide workflow for approval of limit breaches with adequate audit trails.
Provide alerts on dynamic basis before exposure is sanctioned to identify breaches
VI. FUNCTIONAL REQUIREMENTS FOR OPERATIONAL RISK
The Bank aims to migrate to the Advanced Measurement Approaches (AMA) for operational
risk as per Basel II, Basel III and RBI guidelines. The solution should support estimation of all
risk components and capital calculations (regulatory & economic) as per the guidelines issued by
RBI and Basel under the Basic Indicator, The Standardized and Advanced measurement
approaches. The solution should be able to meet the Pillar I, II, III and stress testing requirements
as per Basel-II / RBI guidelines and Basel-III guidelines. The solution should be capable of
supporting all the required statistical, analytical, risk modelling and reporting requirements.
Sl No:
1
1.1
1.2
1.3
Operational Risk Functional Requirements
Risk & Control Self Assessment (RCSA) as per RBI guidelines
The system should have the features to upload, plan and facilitate, track and report
the risk and control self assessment process on a firm wide basis.
System should have customized templates for rolling out RCSA across all the
operational/ functional/ administrative units. The vendor should assist in customizing
the RCSA templates to suit the requirements of the Bank.
The system should be capable of supporting different RCSA methodologies. The
system should support rollout of RCSA using multiple approaches such as top-down,
bottom-up, and hybrid as determined by the bank. Methodology may include
Integrated Risk Management Department, The South Indian Bank Limited.
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1.4
1.5
1.6
1.7
1.8
1.9
1.10
1.11
1.12
1.13
1.14
1.15
1.16
1.17
1.18
1.19
1.20
1.21
clustering/ grouping of risk entities by risk profile, geography or any other criteria
where each cluster can be treated as as one risk entity.
The system should have the capability to map the existing Organization Structure to
the relevant Business Lines as per Basel-II guidelines.
Assessment scheduling shall be done through the system as to when RCSA is to be
done over defined RCSA period. System should have capabilities of sending auto
reminders through emails when the scheduling is due and escalation for delay in
completing the assessment to various levels. System should support assigning
ownerhsip for each RCSA schedule.
End users should be able to rate the identified risks and controls
The system should have the ability to compute residual risk values based on the
ratings applied for risks and controls for each process step
The system should be able to re-run the past assessments based on the revised scale
when there is a change in the rating scales
The system should enable logical structuring of the self assessment scenarios into
units, departments and business lines
The system should be able to aggregate the different ratings and identify outliers.
The system should have the capability to automatically communicate the identifed
outliers to the respective users for further clarifications through bulk e-mail or other
appropriate modes.
The system should have the capability to reclassify/categorize the operational risk's
as per Basel/RBI Guidelines
The system should have the capability to generate heat maps automatically. The
system should have the capability to customize the logic used for creating Heat Maps
(preferably through a master user setting)
The system should have a dashboard facility to view the risk profiles by business
area, business unit, Basel business category etc
System should have the capability of rolling out RCSA through online (web based)
channels
System should have the capability to capture RCSA response planning and tracking
the same
The system should be able to follow up for unresolved action points and generate
status report for the same.
The system should be able to capture testing results. Risk and controls should be
mapped to respective classification such as risk entity, process, product, Basel II
classification, causal factors, risk drivers, significant/non significant risk,
preventive/detective control, control frequency, risk identification by (auditor/risk
entity/IRMD/external events/others) etc.
The system should generate heat maps based on testing results. The same should be
compared to initial heat maps to highlight the shift in risk levels.
The system should be able to generate test plan based upon timelines in action points
The system should have the capability to upload the existing RCSA data with the
Bank
Vendor should conduct a sample run of the entire RCSA exercise as per the process
mentioned by the Bank and Vendor should extend assistance in customizing various
reports and MIS
Integrated Risk Management Department, The South Indian Bank Limited.
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1.22
1.23
2
2.1
2.2
2.3
2.4
2.5
2.6
2.7
2.8
2.9
2.10
2.11
2.12
RCSA template must have the facility for creation of risk and control library. It
should have flexibility to enter any risks identified and corresponding controls in all
the operations and activities of the bank including in the support functions. Risk and
controls so identified should be stored in the risk and control data library.
Risk and Controls in the RCSA template should come from the Risk and Control
Library to avoid repetitive preparation of templates
Loss Data
The system should have the capability to capture operational losses as per the
threshold decided by the Bank. The loss capturing template should be customisable
for different stages of the workflow.
The format used for capturing operational risk losses should be customizable by the
Bank. The system should have download and upload facility for loss risk events in a
specified template.
The system should have dashboard facility to view the loss event in different impact
bucket by business area
System should have facility to capture near-miss events, gains arising from
operational risk loss event and opportunity cost.
System to have the capability to request for and track the reporting of data from
pre‐ defined responsible personnel at predefined frequencies
System should be able to escalate losses to the authorized personnel above a set
threshold. A master user setting should facilitate the input of the escalation structure.
The system should have a methodology to classify losses as per Basel loss events,
Classification logic should be customizable.
The system should be able to generate an 8X7 matrix of loss events and business
lines. And model the operational loss distribution for the entire 56 operational risk
cell.
The system should have the facility to customize/map loss data reports as per the
Bank's needs. Loss information should include type of valuation such as book value,
replacement cost, Mark to Mark (MTM) etc. Vendor should be able to link various
source system and report servers with loss modules for automation of certain types
of loss capture and under reporting analysis.
The system should be able to do scaling, judgment overrides or other adjustments to
the loss estimates.
Information with respect to risk event should be captured such as date of risk event
occurrence, event end date, date of discovery, date of providing contingent liability,
date of accounting / provisioning, description of risk event, location, product,
process, risk entity, root-cause analysis (RCA), causal factors, risk drivers, mapping
with business line and loss event type as per Basel II classification, bank‟s internal
classification etc.
System should flag events as loss event, near-miss, external loss data, operational
gain and opportunity cost for distinct identification of each entry. It should enable
identification of related loss events over time i.e. grouping of related loss events over
a period of time.
Integrated Risk Management Department, The South Indian Bank Limited.
Page 44
2.13
2.14
2.15
2.16
2.17
2.18
2.19
2.20
2.21
3
3.1
3.2
3.3
3.4
The system should have the capability to record recoveries and the category of
recoveries e.g. insurance. There must also be the ability to add or customize
categories and also to customize the recovery recording workflow as per the Bank's
needs.
The system should have facility to arrive at the Gross Loss inter alia including any
direct charges to reserves due to operational losses, all expenses incurred as a
consequence of operational risk events, provisions made, penalty and fines etc.
System should have the ability to identify and approve "boundary issues" i.e. Credit
Risk and Market Risk related losses as per the logic provided by the Bank.
System should also facilitate, where relevant, the use of external data to enhance
scenario analysis, fit severity distributions or benchmark operational risk exposure
results.
The external loss data points in the external loss database should have the following
data points,
1. Loss information
2. Description
3. Supplementary analytic data (balance sheet size, revenue, etc)
4. Classification as per Basel-II standards
External loss data from all sources e.g. public data / pooled industry data / vendor
data, should be supported by the system. System should be able to do scaling,
adjustments (qualitative as well as quantitative). The scaling process should be
systematic, statistically tested and generate outcome consistent with the operational
risk profile of the bank.
System should facilitate validation of loss data through multiple levels of reviews
and approvals e.g. maker-checker and there can be more than one level of review
and approval.
System should facilitate reconciliation of loss data with other source data such as GL
entries etc.
Proposed solution should provide facility to seamlessly upload/ download data to
and from the Loss Data Exchange (CORDEX) setup by Indian Banks Association
(IBA)
KRI (Key Risk Indicator)
System should enable the authorized users to create new KRIs and edit as well as
map existing KRIs. The system should also be capable to interface with multi data
source systems (such as CBS, RBIA etc.) and extract the data from the same in an
automated manner.
The system should enable users to upload plan and facilitate tracking and reporting
on a firm-wide basis of the KRI process.
Definition of KRI with its mapping with various dimensions and classifications e.g.
KRI name, description, mapping with process, activity, product, risk entity, risk
event type classification, unit of measurement, calculation criteria, data attributes
etc.
The system should allow assignment of accountability to each KRI and list out
underlying common risk factors for the KRIs and should also be capable of
estimating/quantifying loss events based on the scenarios for underlying risk factors.
Integrated Risk Management Department, The South Indian Bank Limited.
Page 45
3.5
3.6
3.7
3.8
3.9
3.10
3.11
3.12
3.13
3.14
3.15
3.16
4
4.1
4.2
4.3
4.4
4.5
4.6
4.7
4.8
The system should have the ability to take values from different users and
consolidate them at various levels such as business function, location and business
line.
The system should be able to generate a dashboard, generate reports and analyze
trends based on logic approved by the Bank.
The system should allow setting up KRI specific tolerance threshold limits. The
system should provide for email/SMS alerts whenever KRI values breach the
acceptable threshold limits set for them.
System should cull out continuous red (high risk) and amber (medium risk)
indicators and automatically intimate the person responsible for that KRI.
The system should allow setting of different monitoring frequencies (weekly,
monthly etc.) for each KRI.
The system should record, suggest and monitor action points arising out of red and
amber indicators with agreed timelines. Action plan should include information such
as task to be done, original target date, revised target date, number of revisions done
in the target date, owner for action plan, link with the respective risk event etc.
The system should be able to follow up (as per escalation matrix) for unresolved
action points and generate status report for the same
The system should allow reassessment of indicators and thresholds.
The system should have an algorithm for converting KRI data monitored across
branches, units, geographies into risk scores. The algorithm should also provide for
aggregating risk scores across business lines, geographies, branches and provide risk
scores at different levels for comparison
The vendor should extend assistance by conducting a sample run of the KRI process
as per the Bank specified process.
The vendor should extend assistance in customizing various reports and MIS
System should create a KRI Database which would store the Defined KRIs, which
can be used to assign KRI to various risk
Business Line Mapping & Capital Computation under TSA
The system should have the capability to map the existing Organization Structure to
the relevant Business Line as per Basel-II guidelines on TSA.
System should be able to map all activities of the bank into the eight level 1 business
lines in a mutually exclusive and jointly exhaustive manner.
The system shall also be capable to map the activities of the bank into level 2 & 3
mapping as envisaged by RBI.
When mapping gross income, if an activity cannot be mapped into a particular
business line, then the system should be capable of using an objective mapping
criteria in accordance with the Basel II guidelines.
System should be capable of defining the mapping of any new activities or products
introduced by the bank.
System should be capable of generating reports as envisaged by management. The
bidder should extend assistance in customizing various reports and MIS.
The bidder should also extend assistance by conducting a sample run of the Business
Line mapping process as per the Bank specified process.
System should allow the user to extract the data based on applied filters e.g. Gross
Income mapping for a particular period.
Integrated Risk Management Department, The South Indian Bank Limited.
Page 46
4.9
4.10
4.11
4.12
5
5.1
5.2
5.3
5.4
5.5
5.6
6
6.1
6.2
6.3
6.4
6.5
System should be able to compute gross income for different business lines as per
Basel II / RBI guidelines for TSA, by interacting with data warehouse or other
source systems.
System should incorporate validation checks such as reconciliation of income as per
GL/FS with income considered for capital computation.
System should be able to store documentation containing the rationale for mapping
of Income codes appearing in GL.
System should be able to calculate the operational risk capital as per RBI‟s TSA
guidelines by applying the Beta % prescribed by RBI for each Business line.
Scenario Analysis & BEICFs
Systems should facilitate scenario analysis of expert opinion to evaluate its exposure
to high-severity loss events e.g. including macro-economic scenarios for calculation
of operational risk capital and for operational risk management.
The system should support development of scenario related models under the
scenario based approach.
System should facilitate use of assumptions in scenario analysis based on empirical
evidence.
System should also facilitate review and validation of scenarios.
Solution should provide various methods for the identification and assessment of
Business environment and internal control factors and combining results thereof by
using bank‟s existing operational risk management framework and its
implementation results such as RCSA (Risk and Control Self-assessment) results,
KRI results and Audit Review findings, etc.
Solution should support flexibility for use of BEICF directly or indirectly in the
capital calculation process :
as upward / downward adjustment to operational risk capital
indirect input to the scenario analysis process
Solution should have capability of calculation of capital before and after
consideration of BEICF factors.
Capital Computation - Standardized Approach and AMA
System should be able to compute gross income for different business lines as per
RBI/Basel guidelines or any other alternate classification.
The system should be able to capture loss scenarios and map loss events and
business lines on the basis of low frequency high severity (LFHS), high frequency
low severity (HFLS), low frequency low severity (LFLS), high frequency high
severity (HFHS).
The system should be able to generate a 8X7 matrix of losses and business
The system should allow the user to fit various frequency distributions, including
Poisson, Binomial, Negative Binomial and any other distribution suggested/accepted
by RBI. The system should be able to provide graphical outputs for the fitted
distribution. Vendor should independently develop and validate the distributions
using statistical tools.
The system should allow the user to fit various severity distributions, including
Normal, Log normal, Pareto, Weibull, Beta, Gamma, Inverse Gaussian, Extreme
Value Theory and any other distribution suggested/accepted by RBI. The system
should be able to provide graphical outputs for the fitted distribution. Vendor should
Integrated Risk Management Department, The South Indian Bank Limited.
Page 47
6.6
6.7
6.8
6.9
6.10
6.11
6.12
6.13
6.14
6.15
6.16
6.17
6.18
independently develop and validate the distributions using statistical tools.
System should have capability to integrate all the data elements viz. external loss
data, internal loss data, scenario data, business environment and internal control
factors and generate capital numbers. Vendor should be able to provide the logic of
usage/ combination of the above data elements.
The system should have the capability to run the goodness of fit test for fitting
distribution as suggested by RBI and industry leading practices. Vendor should have
the capability to run the goodness of fit test.
The system should identify the relationship between losses and the provided drivers
based on various regression techniques and the system should rank the provided
drivers against the loss event categories based on the best fit computation of the
identified relationship parameters.
The system should allow user to define scaling methodology for losses at each cell
based on the above relationship
The system should support Monte Carlo simulation for combination of frequency
and severity distribution. Vendor should be able to provide the logic for combination
of frequency and severity distribution through Monte carlo simulation
The system should support Extreme Value theory for fat tail events (Low frequency
high severity -LFHS). Vendor should be able to develop operational VAR for LFHS
events using Extreme value theory
The system should have a functionality to combine frequency and severity
distributions via statistical techniques to form a total loss distribution for each loss
type/business line combination. Vendor should independently develop and validate
the mixing of frequency and severity distribution using statistical tools.
The system should have advanced analytics functions such as: system capability to
extrapolate from the distribution of observed total loss points curve to determine the
likely amount of total losses, etc. Vendor should be able to carry out Advanced
analytics function.
The system should support development of scenario related models under the
scenario approach. System should support identification/generation of scenarios and
their consequent analysis based on inputs received from Internal Loss Data, Relevant
External Loss Data and Business Environment and Internal Control Factors
(BEICFs) in line with the RBI AMA guidelines.
The system should have advanced analytics functions such as: system capability to
carry out structured stress testing, factor the impact of BEICF effect, extrapolate
from the distribution of observed total loss points curve to determine the likely
amount of total losses, etc.
System should support administration and facilitation of the templates designed for
respective assessors for various risk types and business lines. The templates should
be customizable
The system should generate VAR for each scenario as well as aggregated VAR at
Business line level and Bank wide level. Vendor should independently develop and
validate the VAR measures using statistical tools.
The system should fit various distributions based on pre set criteria for each
Scenario. Vendor should be able to fit the frequency/ severity distributions, generate
scenario based on Var and link the Var number to the number derived from internal
loss data.
Integrated Risk Management Department, The South Indian Bank Limited.
Page 48
6.19
6.20
6.21
6.22
6.23
6.24
6.25
6.26
6.27
6.28
6.29
6.30
6.31
7
7.1
7.2
The system should objectively combine LDA data / RCSA data with Scenario data to
arrive at Bank wide capital
The system should enable the user to define rules for combination of LDA data/
RCSA data and Scenario data
System should support the risk Var measure to reflect various confidence levels e.g.
95%, 99.9% etc. Vendor should independently develop and validate VAR using
statistical tools.
The system should be able to adjust capital based on RCSA /KRI / other quality
index and the system should identify the relationship and carry out sensitivity
analysis between RCSA / KRI / other quality index
System should enable validation of any parameters (loss rates, risk indicators, scale
indicators etc.) used in the system to ensure that the inputs to the regulatory capital
charge are reliable e.g. capability to allow the user to run sensitivity analysis
System should enable analyst to model operational risk capital charge with and
without the impacts of insurance
The system should be able to provide graphical outputs for the fitted distribution.
The system should support matrix multiplication, covariance-variance and copula
approaches for the purpose of aggregation of losses at each cell to arrive at bank
wide capital. Vendor should independently develop and validate the above
approaches using statistical tools.
System should enable capital re-allocation to the business lines based on the above
Aggregation
System should support back testing and vendor should be able to carry out back
testing specifying the scope and scale of backtesting.
The software should provide bulk data loading facilities to load the data in database.
Following is expected to be bulk loaded:
·
Loss events with financial impacts (losses and recoveries)
·
Business structures (business lines, risk categories, causes, management
organizations, legal organizations etc.)
·
KRI (& RCSA ), Scenario data
All the processes of the system (including approaches for stress testing) should be
Adequately documented for ease of review and verification by the Bank, external
parties or by the regulator. Vendor should provide adequate assistance during such
reviews. All the documentation of models should include the key assumptions and
key sensitivities of the models. Vendor should be able to carry out stress testing
System should have the facility to define the model input and output ,parameter
estimation of each scenario, frequency and severity distribution and its aggregation ,
calculation of expected and unexpected losses.
Process Mapping and Reporting Structures
The system should provide at least 10 dimensions of structures or hierarchies: Basic
organization of the information onto any one or more of at least a selection of 10
hierarchy structures. (For example: Business units hierarchy, Process Structure,
Product Structure, Risk Library Structures).
System should provide Multi- Hierarchy Structure Management: Multiple
hierarchies or structures permit data to be viewed and managed across more than one
dimension with adequate access and edit permissions as specified by the Bank.
Integrated Risk Management Department, The South Indian Bank Limited.
Page 49
7.3
7.4
7.5
8
8.1
8.2
8.3
8.4
8.5
9
9.1
9.2
9.3
9.4
9.5
9.6
9.7
9.8
9.9
9.10
9.11
System should facilitate split, change, merge, edit and creation of units and codified
data points. For example, with business changes there should be the ability to split or
merge loss and risk data/MIS.
System should have the capability to maintain inventory of processes and reports at
least for seven years
System should support the break-down of processes into logical process steps with
linkages to underlying procedures, unit responsibility and they should be able to be
linked to RCSA, KRI and Loss event
Verification & Validation of processes
The system should have the capability to implement a Bank defined verification &
validation process and should fulfill all audit and compliance requirements.
The system should be able to intake the process flow as mentioned by the Bank
As per the process flow, the system should have the capability to initiate the
verification & validation process and track the progress of various process steps as
per the timelines provided by the Bank
The system as well as the vendor should have the capability to get the operational
risk measurement system (ORMS) validated by independent third parties to ensure it
is compliant with RBI guidelines.
System should provide all the information as may be required for independent
review of Operational Risk Management Framework (ORMF)
Risk Reporting
Periodic reports to be generated on loss event types highlighting the findings of
RCSA, Audit, Loss, Potential loss and Near Miss data, KRI and Scenarios
The system should be capable of generating performance measurement reports
measured vis-a-vis RCSA results, KRI status and action taken by units/business
lines. Solution should provide capability for the allocation of capital to business
lines, RAPM (Risk Adjusted Performance Measurement) and RAROC (Risk
Adjusted Return on Capital).
System should provide linkages between RCSA, KRI, loss data and audit processes
as required by the Bank.
The system should provide a drill through heat map. The system should provide drill
down reporting.
The operational risk charge before and after any reduction in capital resulting from
the use of insurance.
The system should have adequate graphical reporting tools for reporting loss event
data
System should support KRI dials for the dashboard reporting
System supports to build various MIS reports Loss matrix, Trend analysis, Issues
and action plan status report etc., as per the requirements of the Bank
System should support slice and dice of structure values and filtering of risk areas
simultaneously
The system should provide capital charge drill down at each cell level, which would
provide a split of LDA VAR and Scenario VAR and from Total Scenario VAR the
system should provide drill down to VAR of each Scenario
The system should display capital before diversification and capital after
diversification effect and highlight the diversification impact
Integrated Risk Management Department, The South Indian Bank Limited.
Page 50
9.12
9.13
9.14
9.15
9.16
The system should display capital before BEICF adjustments and capital after
BEICF adjustments and highlight the impact of BEICF
The system should aggregate the RCSA scores of risk events to arrive at a Bank
wide RCSA profile
The system should generate reports pertaining to outstanding issues and/or action
plans emanating from RCSA/KRI/Loss Data Analysis at any given date
The system should generate reports for processes that has loss data but no KRI /
RCSA and for processes that have adverse RCSA events but no KRI
The vendor should provide post implementation support, configuration training and
enduser training.
VII. FUNCTIONAL REQUIREMENT FOR MARKET RISK
The Bank aims to migrate to the Internal Model Approaches (IMA) for market risk as per Basel
II, Basel III and RBI guidelines. The solution should support estimation of all risk components
and capital calculations (regulatory & economic) as per the guidelines issued by RBI and Basel
under the Standardised Measurement and Internal Model approaches. The solution should be
able to meet the Pillar I, II, III and stress testing requirements as per Basel-II / RBI guidelines
and Basel-III guidelines. The solution should be capable of supporting all the required statistical,
analytical, risk modelling and reporting requirements.
Sl No
1
1.1
1.2
1.3
1.4
1.5
1.6
Market Risk Functional Requirement
Preparation of capital charge computation report under SMM for market risk
The system should interface with external market information systems including
Reuters, Bloomberg, NSE, BSE, FIMMDA, CRISIL Bond valuer , CCIL, AMFI,
FEDAI and NDS to obtain pricing feeds
The system should extract position data from the treasury system by interfacing
without manual intervention to perform valuations whenever required by the user .
A single engine will be used for valuation. This engine will be from the market risk
system.
The system should be capable of validating data at the interface level to enable
perform of key reconciliation checks between position data in the treasury system
and market risk system
The system should segregate position data obtained from the treasury system in line
with the risk classifications prescribed for SMM i.e. equity, forex/ bullion, interest
rate risk and derivatives
The system should be in a position to compute modified duration based on for all
interest rate instruments including floating rate bonds and zero coupon bonds taking
into account the optionality attached to it. The system should be capable of
exempting certain investments from M-Duration computation and aggregation.
Computation of modified duration should be done based on external price data
extracted from the treasury system as well as for price data manually input into the
market risk system. The market risk system should provide a data capture field
where required for such an updation. However the requirement for manual input of
price data should be minimal and restricted to few products where valuation is
complex like OCCPRS and Unlisted securities
Integrated Risk Management Department, The South Indian Bank Limited.
Page 51
1.7
1.8
1.9
1.10
1.11
1.12
1.13
1.14
1.15
1.16
1.17
1.18
1.19
1.20
1.21
1.22
The system should be able to compute modified duration from PV01.
In case of interest rate derivatives, the system should be in a position to identify
back-to-back trading positions based on current RBI guidelines that are treated as
matched positions (i.e. having critical terms matching with a 15bps spread on the
fixed leg) and derivatives undertaken for hedging (other than to hedge trading book
positions). These should be excluded from the computation of market risk capital
charge.
In case of floating rate bonds, the system should perform the valuation in line with
current FIMMDA guidelines
Valuation of forex positions would be required to be undertaken based on FEDAI
rates on monthly basis and based on input from market data providers on daily basis.
System should be able to compute forward prices based on both
1) Interest Rate Parity method
2) Forward premiums available from market data vendor
The system should be in a position to capture the NOOP limit and treat the higher of
NOOP or actual open position in equivalent USD terms as the basis for computing
forex/ bullion position
The system should support the following three methods for determining the option
position and computing capital charge:
1) Simplified Approach
2) Delta- Plus Approach
3) Scenario Approach
The system should be in a position to bucket interest rate risk positions in different
time-bands zones as prescribed by RBI based on residual maturity.
The system should apply horizontal and vertical disallowances based on prevalent
RBI guidelines
The system should be able to treat interest rate swaps as a combination of two
equivalent securities for the purpose of determining risk position and computing
modified duration
For the floating leg of an interest rate swap, modified duration should be computed
based on the next reset
The system should be able to compute the modified duration based on the PV01 of
the floating leg of the interest rate swap
The system should be able to apply the relevant market risk capital charge
depending upon the portfolio classification
The system should be in a position to compute capital charges for the AFS portfolio
in the following manner:
- Compute general and specific charge as for HFT
- Compute alternative capital charge for specific risk
- Compute the higher of the two to determine capital charge
The system should be able to compute specific charge based on rating criteria
provided by the user and updated from time to time
The system should be able to differentiate specific charge for both rating criteria and
category of issuer
The system should enable reduction of risk position post netting of collateral for
determining specific charge. This should be parameterised by the user.
Integrated Risk Management Department, The South Indian Bank Limited.
Page 52
1.23
1.24
1.25
1.26
1.27
1.28
1.29
1.30
1.31
1.32
1.33
2
2.1
2.2
2.2.1
2.2.2
2.2.3
2.2.4
2.2.5
2.2.6
2.2.7
2.2.8
2.2.9
2.2.10
2.2.11
2.2.12
2.2.13
2.2.14
The system should aggregate capital charge across all risk categories
The system should report the market risk capital charge computation in the format
prescribed by RBI
The system should generate the quantitative disclosure report for market risk as
required by RBI
The system should be in a position to simulate the impact of incremental positions
on the market risk capital charge
The system should be able to compute risk positions in different currencies and
perform required capital charge computations by currency
The system should support the following valuation methodologies:
- Mark to market
- Mark to model
- Cost to close
The system should allow for adjusting valuations based on illiquidity premium
The system should be in a position to adjust valuation decrease caused due to
illiquidity premium from the available capital
The system should be in a position to compute capital charge for delayed
settlements based on the multipliers prescribed by RBI
In case of non-DVP transactions, the market risk system should be in a position to
collate overdue settlement beyond 1 day from the treasury system across all asset
classes
In case of non-DVP transactions, the market risk system should be in a position to
collate overdue settlement beyond 5 day from the treasury system across all asset
classes and reduce the same from the capital
Limit Monitoring
The system should allow the user to set the limits based on the notional principal,
VaR, risk sensitivity factors, MTM, book value, daily P&L and cumulative P&L for
individual scrips as well as the aggregated portfolios
The system should have the capability of setting and monitoring the following type
of product wise limits at the frequency defined along with it:
Fixed Income
Product wise and Overall Investment Limit (Real-time)
Limits on the size of the proprietary Trading book
Dealer-wise limit
PV01 based limits for Investment (under AFS + HFT)
Short Sale Limits
Deal size limits (Real-time)
Maturity wise limits (Real-time)
Rating-wise limits for rated instruments (Real-time)
Industry / sector wise limits (Real-time)
Portfolio as well as security level stop loss limit (Real Time)
Portfolio as well as security level Cumulative stop loss limit (Real Time)
VaR limit (Preferable near real time but can be at a batch process level)
Equity & Equity MF
Overall Investment limit (Real-time)
Deal size limit (Real-time)
Integrated Risk Management Department, The South Indian Bank Limited.
Page 53
2.2.15
2.2.16
2.2.17
2.2.18
2.2.19
2.2.20
2.2.21
2.2.22
2.2.23
2.2.24
2.2.25
2.2.26
2.2.27
2.2.28
2.2.29
2.2.30
2.2.31
2.2.32
2.2.33
2.2.34
2.2.35
2.2.36
2.2.37
2.2.38
2.2.39
2.2.40
2.2.40
A
2.2.41
2.2.42
2.2.43
2.2.44
2.2.45
2.2.46
2.2.47
2.2.48
2.2.49
2.3
Scrip-wise limits for Equity (Real-time)
Investment limit for Equity MF (Real-time)
Portfolio as well as scrip level stop loss limit (Real Time)
Portfolio as well as scrip level Cumulative stop loss limit (Real Time)
VaR limit (Preferable near real time but can be at a batch process level).End of day
Limit is preferable.
Foreign Exchange and Bullion
NOOP limit (End of the day)
Intraday (Daylight) Position Limits
Overseas Investment Limits
Tolerance Limit
Dealer-wise Open Position Limits
Aggregate gap limit (End of the day)
Deal size limits(for different products) (Real-time basis)
Portfolio as well as currency level stop loss limit (Real Time)
Portfolio as well as currency level Cumulative stop loss limit (Real Time)
VaR limit (Preferable near real time but can be at a batch process level)
Gold overnight position limit (real time)
Derivatives
Deal Size limits (Real Time)
Greek limits for options
Delta limits (Real time)
Overall Gamma (Real Time)
Gamma beyond 3 day (Real Time)
Vega (Real Time)
Rho (Real Time)
Phi (Real Time)
Maturity segment wise PV01 limits for interest rate derivatives
Stop loss limit (Real Time)
Take Profit limit (Real Time)
Cumulative stop loss limit (Real Time)
VaR limit (Preferable near real time but can be at a batch process level)
IRS and FRA Exposure limits (Net Open Position)
Currency Options / Futures / Swaps – Foreign Currency : Exposure Limits (Gross
Open Position)
Rupee Options : Exposure Limits (Gross Open Position)
Interest Rate Swaps / Forward Rate Agreements / Futures – Rupee : Exposure limits
(Net Open Position)
Counter party limits
Liquid mutual fund;-Regulatory limit, external minimum rating for
MF
Per Fund house limit Portfolio as well as scrip limit VaR limit etc
Liquid mutual fund;-Regulatory limit, external minimum rating for
MF
Per Fund house limit Portfolio as well as scrip limit VaR limit etc
The system should have the functionality where dealers are able to view the current
limit utilization as well as the impact on limit utilization of a deal on a pre-deal basis
Integrated Risk Management Department, The South Indian Bank Limited.
Page 54
2.4
2.5
2.6
2.7
2.8
2.9
2.10
2.11
2.12
2.13
2.14
3
3.1
3.2
of Various Risk parameters including Deal wise VaR.
The system should have the facility of setting trigger levels for the limit breaches
(soft limits) where the system will generate alerts once the trigger level is reached to
pre-defined users.
The system should have a process flow built-in for authorization of limit
enhancements.
The System should be able to generate limit breach report as and when the limit
breaches happens and send the notification to the pre-defined set of people.
All major limits like Noop, Agl, Var, Stop loss and dealer wise positions should be
included in the report.
The system should be able to generate limit utilization report at the end of the day
and also for a historical period including any breaches.
The system should maintain audit trails for any changes in configuration of limits.
The system should be capable of monitoring VAR based stop loss limits.
The system should be capable of generating consolidated reports showing exception
if any under different risk parameters after making a comparison of actual and
limits as defined by the Mid office from time to time
The system should be capable of monitoring compliance with limits laid down in
Policy in respect of liquid investments
The system should be capable of computing the Beta in respect of different
portfolios
The system should be capable of monitoring compliance with Portfolio Beta Limits
and M-durartion limits
The system should be capable of monitoring investments in capital instruments of
Financial institutions and Banking sector daily basis as required under Basel III
norms
Valuation
Product Coverage
The system should be able to perform the pricing as well as MTM valuation of all
the products in the Bank‟s portfolio as well as the products that the Bank may wish
to
deal
in
the
future.
The system should be capable of doing valuation at least on a weekly basis.
The list of the products is provided below:
Foreign Exchange
FX Spot-Forwards(including both merchant and inter bank forwards)
European FX Options
ET FX Futures
ET FX Options on Futures
Interest Rate
Cash management bills
Securitisation (Pass through Certificate including investment for meeting priority
sector lending targets)
Call Money
Repos / Reverse Repos
Treasury Bills
Commercial papers
Integrated Risk Management Department, The South Indian Bank Limited.
Page 55
3.3
3.4
Certificates of Deposit
Short Term Notes
Promissory Notes
Single Cash flow
G-Secs
Fixed Coupon Bonds
Coupon stripping
Zero Coupon Bonds
Floating Rate Notes including but not limited to:
Plain Vanilla
Structured
Amortizing
Averaging
Capped / Floored
Callable / Putable
Inverse Floater (reverse)
Perpetual
Interest rate Derivatives
Forward Rate Agreements (FRAs)
Interest Rate Swaps (IRS)
Plain Vanilla
Cross Currency IR Swaps
Basis Swaps
Zero Coupon
OIS (MTM Calculation using daily reset and compounding)
Amortizing Swaps & swaps with different fixing and payment frequencies
Averaging Swaps
Constant Maturity Swaps
Interest Rate Swaptions
Caps, Floors and Collars
Interest Rate OTC exotic options (indicate which ones)
Callable / Putable Swaps
Convertible Bonds/Convertible preference shares
Dual Currency
Ex Coupon
Step-Up / Step-Down
Interest Rate Strips
Interest Rate Futures
Equities
Equity options, futures and swaps
Warrants
Equity shares(including Indian Depository receipts (IDR))
Non-convertible preference shares
Index options, futures and swaps
Note:- The system should have flexibility to use market prices of equities published
Integrated Risk Management Department, The South Indian Bank Limited.
Page 56
3.5
3.6
3.7
by two or more exchanges and take the lowest price
Commodities Options, Futures and Swaps
Credit Default Swaps
Generation of Term Structures
The system should be able to define an unlimited number of term structures for a
satisfactory coverage of the various markets within a specific currency (libor, bond,
swap, etc.)
The system should provide multiple yield curve data display for spread comparisons
between different markets
The system should support Yield curves
-generation from internal fund costing
-capture external benchmark curves
The system should provide option to construct and use yield curves using any one of
bid, offer or mid-rates
The system should provide the user with the functionality to choose, assign,
combine and link on the term structure the benchmark instruments quoted on the
market for:
Forward Rate Agreements (FRAs)
Treasury Bills
Commercial Papers
Repurchase Agreements
Interest Rate Futures
Interest Rate Swaps
Generic Bonds
The system should be able to imply the yield curve from FX Spot-Forward structure
also
Choose industry standard yield curve bootstrapping types:
Zero Coupon
Forwards
Proprietary
Chose industry standard interpolation/extrapolation methodologies:
Linear
Exponential
Logarithmic
Cubic spline
Proprietary
The system should accept upload from pre-calculated values from external
applications in the form of Vector of Discount Factors
The system should define/assign separately Discount Yield Curve and Forward
Estimation Yield Curve for structured pricing.
The system should be able to handle negative rates
The system should allow basic graphical term structures analysis for better
understanding of market conditions:
Based on historical information
Based on simultaneous curves comparison
Integrated Risk Management Department, The South Indian Bank Limited.
Page 57
3.8
3.9
Volatility Curves Generation:
The system should define an unlimited number of term structures for a satisfactory
coverage of the various markets
Across all currencies
Across all markets within a specific currency (caps, floors, bond options, swaptions,
exchange-traded options, puts and calls)
Across all Tenors
Across all strikes to include Term/Moneyness effect (Smile Effect)
Interest rate volatility structure
The system should choose, assign and combine on the term structure the benchmark
instruments quoted on the market
Caps
Floors
Options on Interest Rate Futures
Swaptions
Bond Options
The system should incorporate industry standard calculation methods in volatility
curve generation functionality like swaptions volatility Implied from correlations
with other markets (caps / floors)
The system should allow to chose interpolation methodology
Linear
Proprietary
Cubic spline
The system should upload pre-calculated values from external applications
Vector of Forward volatilities
FX volatility Structure
Chose industry standard interpolation methodology
Linear
Proprietary
FX Spot-Forward structure:
The system should define an unlimited number of FX structures for a satisfactory
coverage of the various markets.
FX Forward generation functionality:
Forward premium Quotes from the markets
FX Forwards implied from Yield Curve structure (Interest Rate Parity)
Yield Spread curves generation
The system should define term structure points as a spread over any of the
benchmark instruments
The system should define term structures as a spread over any other interest rate
term structure
The system should incorporate Securities, Equities and Commodities prices
The system should define for each benchmark instrument all key parameters
necessary for correct calculations (i.e. Day Count Basis, Business day Convention,
Holiday Conventions, etc.)
The system should be able to extend database model in order to handle new
instruments
Integrated Risk Management Department, The South Indian Bank Limited.
Page 58
3.10
3.11
The system should configure and customise any instrument parameters at the cash
flow level.
The system should define a new instrument by inheriting the logic of its constituent
instruments. The system should reuse existing functionality modules without
unnecessary code duplication and user re-definition.
Calculation Methods
Foreign Exchange Models (for Spots and Forwards):
Net Present Value
Marked To Market (Forward value comparison)
The system should conform to accrual and other accounting revaluation
methodologies:
Interest Rate Models and Indexes:
Net Present Value
Discount Curve
Forward Estimation Curve
Index Yield Curve
Calibration to market
The system should conform to accrual and other accounting revaluation
methodologies
Fixed Income / Securities
Marked To Market
NPV from any yield curve
Fixed spread over any yield curve
Fixed spread over Benchmark Bond
Incorporation of common optionality models
Marked to Market
Black – Scholes (BS)
The system should specify custom / in House pricing models
System should allow user to over write Fixings and Cash flows, which shall be
considered for P&L computation.
The system should display partial calculations results for reconciliation and model
risk analysis
Factor Sensitivity Analysis
The system should calculate factor sensitivities at trade, position and portfolio level
using:
”Par” Rates shift
Zero Coupon shift
First and Second Order Derivatives on NPV
The system should calculate sensitivities. Including but not limited to:
Interest Rate Delta:
Discount Delta (DF sensitivity)
Forward Delta (Forward rate sensitivity)
Delta Total
Interest Rate Gamma:
Discount Gamma
Forward Gamma
Integrated Risk Management Department, The South Indian Bank Limited.
Page 59
3.12
3.13
4
4.1
Gamma Total
Vega
Theta
Discount Theta
Option Theta
FX Spot Sensitivity
FX Delta
FX Gamma
FX Vega
Rho
Maturity bucket wise PV01
Phi
Vanna
Volga
The sensitivity factors should be netted according to the maturity for a portfolio
level sensitivity analysis.
Decision Support Tools
Portfolio optimization
Benchmarking relative to user defined indices and portfolios
Determination of Efficient frontier
Scenario analysis
What if analysis
Simulation Tools
Sensitivity analys
Hedge Effectiveness Testing
Profit & Loss Attribution
The system should decompose P&L into the constituent risk factors responsible for
the net portfolio value change:
IR Delta P&L
IR Gamma P&L
FX Vega P&L
IR Vega P&L
IR Time Decay (Theta)
Trade events
New trades
Amended trades
Void trades
The system should display and report Profit & Loss attribution using drill down
capabilities
The system should display and report Profit & Loss attribution using graphic
capabilities
System should allow TMO to over write Fixings and Cash flows, which shall be
considered for P&L computation.
VaR Calculation and Back testing
The system should be able to use the extracted position data and market data
Integrated Risk Management Department, The South Indian Bank Limited.
Page 60
4.2
4.3
4.4
4.5
4.6
4.7
4.8
4.9
4.10
4.11
4.12
4.13
4.14
4.15
4.16
4.17
4.18
4.19
4.20
4.21
The system should give the user the flexibility to choose the risk factors applicable
to compute VaR
The system should be able to retrieve historical data of the risk factors based on the
user-defined holding period.
The system should be able to calculate VaR using parametric approach, deltagamma approach, variance-Co-variance method, Monte-Carlo approach and
Historical simulation methods.
The system should be able to calculate parametric VaR using industry standard Risk
Metrics methodology.
The system should estimate VaR for Non-Gaussian risk
The system should be able to calculate volatilities using relative price changes,
absolute price changes and logarithmic price changes
The system should allow applying different volatility estimators and models:
moving averages, exponential with definition of Decay Factor, GARCH &
Stochastic Volatility estimates.
The system should have the ability to calculate correlation using historical data and
have the flexibility to set parameters to incorporate volatilities and correlation data
from external source.
The system should allow user-defined confidence intervals and holding periods as
well as decay factor for historical valuation method
The system should calculate Undiversified / Diversified / Partially Diversified VaR
to allow for risk factors correlations contribution.
The system should allow inclusion/exclusion of gamma and Vega factor sensitivities
for linear transactions and optionality
The system should perform calculations in "Real Time" or "Near Real Time" and
batch basis
The system should calculate and store the various components of VaR for further
drill down reporting capacity
For historical simulation, the system should support variants of Full Valuation for
performance issue enhancements
For Monte-Carlo approach, the system should have an accurate and sizeable (50000
numbers minimum) random number generator algorithm which can support multiple
probability distributions
The system should include standard processing methodologies for run time
performance enhancement, (e.g. Distributed / parallel processing)
The system should provide variance reduction techniques
The system should provide for multi-process Monte-Carlo processes ( i.e. to define
the length of Monte Carlo steps, the mean reversion and standard deviation for the
models used to describe risk factors relationships)
The system should display Monte Carlo price paths leading to losses greater than a
certain amount (user definable) in order to provide a better understanding /
interpretation of the market conditions that could generate such losses.
For incremental VaR, there is a need for a system that approximates VaR in an
additive form without recalculation of the complete firm-wide portfolio. (for intraday calculation)
Integrated Risk Management Department, The South Indian Bank Limited.
Page 61
4.22
4.23
4.24
4.25
4.26
4.27
4.28
4.29
4.30
4.31
4.32
4.33
4.34
4.35
4.36
4.37
4.38
4.39
4.40
4.41
4.42
The system should have the functionality to compute transaction level (Component)
VaR
The system should have functionality to aggregate VaR at any hierarchy level
The system should perform incremental calculations in real time
The system should have open architecture to allow link to external proprietary VaR
engines.
The system should allow user-defined scenarios to override-adjust historical pattern
assumptions (e.g. special events)
Allow combination of analytical and simulation methods based on product type for
performance enhancement
The system should allow combination of analytical and simulation methods based
on product type for performance enhancement
The system should select interval periods for comparing P&L and VaR (at least for
252 trading days)
The system should test parameters by simulating VaR on historical portfolios and/or
rates
The system should be able to generate exception reports.
The system should be able to classify the number of exceptions in green, yellow and
red zones as defined by the RBI and generate a report on that.
The system should be capable of computing VaR in respect of all financial
instruments dealt by bank presently and in future
The system should be capable of defining VaR reporting hierarchy like Treasury
VaR, Asset Class VaR, Portfolio VaR,Portfolio Asset class VaR, Instrument VaR
and Component VaR
The system should be capable of computing VaR in respect of equity positions and
interest rate sensitive positions( including those interest rate sensitive positions
which has credit risk)
The VAR models in the system should be capable of combined VaR in respect of
specific and general market risks for equity positions.Further it should be able to
isolate the VaR for each component so as to enable its back testing and day to day
risk management
In case of interest rate sensitive positions which has credit risks, the system should
be able to compute Incremental risk charge for default and migration risks , which
are generally not captured by the VaR model. Alternatively these risks may be
factored in the VaR model in a sensible manner
The system should be capable of computing and displaying the VaR measures which
are denominated in INR.
The system should be flexible in choosing the historical observation period and
different methodologies for computation of VaR
The system should facilitate frequent update of data sets in a flexible and convenient
maner
The system should have sufficient statistical tools to test the accuracy of VaR
models
The system should accommodate the application/usage of different VaR models for
different asset classes
Integrated Risk Management Department, The South Indian Bank Limited.
Page 62
4.43
4.44
4.45
4.46
4.47
4.48
4.49
4.50
4.51
4.52
4.53
4.54
4.55
4.56
4.57
4.58
4.59
5
5.1
5.2
5.3
5.4
5.5
5.6
5.7
In case of non- linear portfolio, which do not have identical and independent
normally distributed returns, VaR models should not use square root rule to scale up
VaR numbers
The system should be capable of incorporating risk factors used in pricing model
into the VaR Model
The VAR models should capture the Basis risk and correlation risk
The system should facilitate the risk adjusted performance measurement based on
VaR
The system should have utilities to mitigate model risks that may surface
subsequently or incorrect application
The system should be capable of computing liquidity adjusted VaR
The system should Back-Test the portfolio value change excluding / including new,
voided, amended trades
The system should be capable of performing back testing on actual as well as
hypothetical P&L.
The system should be capable of performing back testing on dirty as well as clean
(minus brokerage, commission etc.) P&L.
The system should have the functionality to perform sub-portfolio level back testing.
The system should have the functionality to perform back testing for multiple
confidence intervals.
The system should store the historical back testing exceptions for at least 3 years.
Back testing: specific risk
The system should have the capability to run the goodness of fit test for fitting
distribution as suggested by RBI and industry practices.
The model should be able to capture concentrations (magnitude and changes in
composition) in specific sectors and counterparties.
Incremental risk charge (IRC)
The IRC model in the system should appropriately reflect the issuer and market
concentration, concentration within and across product classes
The system should use Multi-period model to compute incremental risk, and it
should be capable of evaluating implied correlations
The system supports indirect methods of testing IRC model including at the
minimum stress testing, sensitivity analysis and scenario analysis to assess
qualititative and quatitative reasonableness
Stress Testing
The system should allow the user to define multiple portfolios and assign exposures
to each portfolio.
The user should be able to define multiple stress testing scenarios for each portfolio
The system should allow users to save the stress testing scenarios defined.
The user should have the entire list of scenarios defined available for him to select
the desired scenario for each portfolio at run-time.
The system should allow the user to define multiple risk factors for each stress test
scenario, depending on the nature of the portfolio.
The system should be able to upload multiple scenarios directly from excel/csv files
The system should have the ability to determine the correlation between risk factors
based on historic data
Integrated Risk Management Department, The South Indian Bank Limited.
Page 63
5.8
5.9
5.10
5.11
5.12
5.13
5.14
5.15
5.16
5.17
5.18
5.19
5.20
The system should have the ability to accept correlation information as user defined
parameters
The system should have the ability to conduct stress testing covering General
scenarios (for entire trading book) and Portfolio specific scenarios using single or
combination of risk factors.
The system should be capable of accepting risk factor shifts on:
Single term structure
Two or more term structure modelling relationships such as correlations between
curves and auto correlation , FX interest rate parity etc.
Two or more term structure assuming no correlations
At a minimum, the system should support stress testing based on shifts in the
following risk factors:
Yield curves (Parallel Shifts, Non Parallel Shifts, Changes in the
convexity of the curves & Changes in Basis)
Volatility curves
FX – Spot
FX – Forward structure
FX Volatility
Commodity curves
Equity Indices
Change in correlation and change in Distribution shall also be included.
The system should be capable of accepting the following calculation parameters
from the user:
Spreads over benchmark curves and between market curves.
Volatilities and correlations
The system should have the capability to execute multiple scenarios together and
determine the combined effects on the portfolio.
The system should be capable of accepting risk factor shifts in the form of:
Absolute figures
Percentages
Custom expressions
The system should have the capability to display the stress test results in tabular
form as well as graphical form
The system should have the capability to accept stress test limits at the following
granularities:
Complete trading book level
Portfolio level
The system should have the ability to raise exceptions in the event of a breach of
stress testing limits
The user should have the ability to schedule stress tests in the system and for report
generation of the stress test results.
The system should have the ability to create reports in a web-based dashboard
formats to enable senior management to access such reports remotely.
The system should accommodate testing of probabilistic , historical as well as
hypothetical scenarios(including macro-economic scenarios)
Integrated Risk Management Department, The South Indian Bank Limited.
Page 64
5.21
5.22
5.23
5.24
6
6.1
6.2
6.3
6.4
6.5
6.6
6.7
6.8
6.9
6.10
6.11
The system should be flexible to input and use historical data for specified period
and specified multiple sets of data for e.g 2007-2008 for computing stressed VaR.
The stress testing utility of system should be capable of addressing recovery rate
uncertainty implied correlation and skew risk and other risk factors that are not
captured in VaR model.
The system should be capable of using Monte- Carlo simulation in assessing the
stress testing shocks to be applied. Besides, while performing the Monte- Carlo
simulation the system should be capable of considering the anti-thetic data ( i.e
model should consider changes that are based on the magnitude of historical price
movements, applied in both directions- irrespective of the direction of the historic
movement.)
The model should be capable of assessing and applying shocks of the magnitude
experienced elsewhere although the bank was not exposed to such scenario;
provides the information on such scenarios are previously feeded into the system
Internal and Regulatory Reporting
The system should produce screen and print level reports within flexible user
defined hierarchies and business unit aggregation rules
At a minimum the following reports should be produced
Control Reports
Transaction inventory reports
Open Position reports based on any hierarchy level and any transaction/computed
values
Risk Reports
Produce position reports for various parameters: delta, gamma, vega, theta, etc.
based on internal hierarchy or sub-portfolios/trades.
Product limits and gaps reports based on risk parameters.
VaR reports disaggregated into various risk components (regulatory requirement)
Simulation/stress testing reports (with drill-down capability)
Portfolio Analysis
The system should generate reports using any stored historical data
The system should have a report writer where user may define the content and
format of any new reports.
Profit & Loss Reporting
The system should produce profit & loss report based on the net present value
approach, accruals and other accounting methodologies, etc. for any defined
portfolio with drill down capabilities to a transaction level
The system should include in profit & loss calculations: transaction costs (brokerage
fees, commissions, and other deal costs attached to the instrument cash flow
structure)
The system should also have the capability of cleaning the MTM (removing
transaction costs) for the purpose of back testing.
The system should calculate and display profit & loss results in local currency, base
currency, reference currency and any other user‟s currency.
The system should calculate and display profit & loss by year-to-date, month-todate, or any other two dates/periods real time or using historic data.
The system should produce graphical representation of profit & loss results
Integrated Risk Management Department, The South Indian Bank Limited.
Page 65
6.12
6.13
6.14
6.15
6.16
6.17
6.18
6.19
6.20
6.21
6.22
6.23
6.24
6.25
6.26
6.27
6.28
6.29
6.30
6.31
Drill Down Functionality
The system should aggregate / breakdown information at any level based on static
information (i.e. trades attributes). Including but not limited to:
Currency
Counterparty
Instrument type
Book
Trader
User-definable attribute
The system should aggregate / breakdown information at any level based on
dynamic Information (results categories) including but not limited to:
NPV
Delta
VaR
The system should aggregate / breakdown any combination of static and dynamic
information.
The system should display results in a Multi-dimensional format (e.g. Excel Pivot
Tables)
Reporting Requirements - IMA
The System should provide complete qualitative and quantitative disclosures
required for IMA approval.
High, mean and low VaR values over the reporting period and period – end;
High, mean and low stressed VaR values over the reporting period and period – end;
The System should provide Back Testing Exception reports
Reporting Requirements - Internal
The system should generate reports on:
Duration, M.Duration, Convexity, VaR, PV01, PVBP
Investment Operations
Summary of Banks aggregate exposures like Duration, Modified Duration/VaR,
Mismatches, Forex VaR etc.
Mark to Market Reports of Investment Portfolio, Foreign Currency Portfolio,
Derivatives Position
In addition to the above the system should generate following reports
Stress testing Reports
Limit Exceptions Reports
Market Risk Report
Mark to Market Reports (Investments/Forex/ Commodities)
Report on Duration, M-Duration, VaR (Investment Portfolio-wise)
Currency-wise forex GAP Reports (IGL/AGL)
Market Analysis Report (Volatility/Trends and other risk indicators)
Market Scenario/Strategy (Based on volatilities, correlations)
Open Position Report for Precious Metals
Risk Limit Tracking
VaR Reports (Forex/Domestic Treasury/ALM)
Report on assessment of Risk adjusted Earnings (RAROC)
Integrated Risk Management Department, The South Indian Bank Limited.
Page 66
7
7.1
7.2
7.3
7.4
7.5
7.6
7.7
7.8
8
8.1
8.2
8.3
8.4
8.5
8.6
8.7
8.8
8.9
8.10
8.11
Capital Computation
The System should be able to calculate market risk regulatory capital under IMA
consisting of the following two components, based on VaR measure:
General Market Risk Charge; and b) Specific Risk Charge [including Default Risk,
Credit Migration Risk, Credit Spread Risk, Incremental Risk etc. In addition, the
sytem should compute capital based on the VaR ,and Stressed VaR numbers on a
daily basis according to the framework defined by RBI.
The user should be able to define certain portfolios where capital will be entered
manually. However entry of capital manually should be an exception rather than a
rule.
The system should have the functionality to define the RBI allowed multiplication
factor as a default.
The multiplication factors should be user defined.
The system should be able to calculate capital for different asset classes as defined
by the user as well as for the aggregate Bank portfolio.
The system should be able to attribute the movement in capital to a risk factor level.
The system should be able to decompose the capital and attribute it to various asset
classes. It should be able to perform simulation where by changing the composition
of the portfolio, change in capital should be calculated.
The system should be able to generate a report as per RBI format for reporting of the
Capital.
Computation of Credit Value adjustment
The system should be able to access the position data (OTC Derivatives) and market
data stored in the table structure.
The system should segregate position data obtained from the treasury system
counterparty wise.
The system should interface with the Core Banking System to obtain counterparty
wise collateral information and other exposure mitigates such as margining.
The system should be able to perform MTM valuations in all the asset class viz.,
interest rate, equity, FX, credit and commodities for the existing portfolio of the
bank.
The system should be able to apply credit mitigates under a netting set (i.e. netting,
collateral, etc.)
The system should be able to interface with the credit risk system / core banking
system to obtain the rating for all the counterparties.
The system should be able to extract the tenor-wise PD/LGD data from the credit
risk system / core banking system or calculate it based on credit spreads of the
counterparties
The system should follow distributed processing to reduce calculation time
The system should be able to attribute the CVA for counterparty to instrument level.
System should provide ability to compute Credit Value Adjustment (CVA) as
prescribed by RBI in Basel-III guidelines.
The system should be capable of arriving at the Exposure at default and compute
capital risk charge using Current Exposure method at trade level as well as
counterparty level
Integrated Risk Management Department, The South Indian Bank Limited.
Page 67
8.12
8.13
8.14
9
9.1
9.2
9.3
9.4
9.5
9.6
9.7
9.8
9.9
9.10
10
10.1
10.2
10.3
10.4
10.5
10.6
The system should be able to classify trading positions into Interest rate and FX as
advised by RBI
The system should be able to apply the standard credit conversion factors as
prescribed by the RBI
System should provide ability to compute CVA on marginal basis and standalone
basis at trade level and portfolio levels
Control specification for the system
The system should have interface level controls for data extracted from the treasury/
market risk system
The system should allow for three levels of access:
- User administration access to parameterize the model
- IT administrator access to configure screen level rights
- GUI to review and view output from the system
The system should maintain an audit trail for data override functions used
Deviations in output from VaR models resulting from changing default
configurations should be logged by the system
In case of plug and play models used for VaR computation, the system should allow
for the same level of operational control as in-built models
Limits parameterized within the system should have auto-triggers and auto-mailers
to inform people specified within the user hierarchy
Pre-limit warning functions should be embedded with the system
Report on reconciliation showing difference in valuation between treasury and market risk
system if any should be generated in the market risk system
Access to data tables within the system should be possible only from pre-defined
interfaces or user entry screens. Ability to write to data tables by manual input at an
interface level is not acceptable.
Where RBI permits for reports to be uploaded to OSMOS, the system be able to
provide such an upload functionality
Other functional requirements
System should facilitate establishing a relationship between certain Credit and
Market risk drivers (such as Exposure amount / NPA % / PD % / VaR, etc) to
changes in macro-economic factors (such as GDP / Inflation / Interest rates, etc)
using statistical techniques such as regression
The system should be capable to model the Yield curve using minimum of six risk
factors to capture interest rate risk.
System should be able to divide the yield curves of, at a minimum, the major
currencies and markets into a minimum of six maturity segments
System should have an option whereby regulator/internal auditor is able to see all
the underlying data, trace its origins and understand how the risk models work with
other systems within the bank
The system should be able to interface with FTP system
The system should have the pre-built templates and should also have the
functionality for a business user to define and customize Market Risk MIS across all
matrix dimensions such as:
Counter-party
Portfolio
Integrated Risk Management Department, The South Indian Bank Limited.
Page 68
Product
Geography – country/ state/
Sectoral Concentrations
Risk Profiles
Rating wise
Delinquency buckets
VIII. FUNCTIONAL REQUIREMENTS IN RESPECT OF PILLAR- II, PILLAR- III &
BASEL III AND INTEGRATED CAPITAL COMPUTATION MODULE
Sl. No
1
1.1
1.2
2
2.1
2.2
2.3
2.4
2.5
2.6
2.7
3
3.1
3.2
4
4.1
Pillar II, Pillar- III & Basel III & Integrated Capital Computation Module
Functional requirement
Reporting
A reporting Tool with a presentation layer
An ETL tool for extraction of capital computed from the four respective systems
(CRMS, ORMS, MRMS and ALM/FTP)
Data Model
The solution should provide a single data model to serve as a single repository for
all the Market Risk, Credit Risk, Operational Risk, ALM and FTP Solutions
Provide a Physical Data Model
Provide the ability to perform data transformation
Provide the ability to execute the calculation of each of the concerned applications
directly from the Data Model
provide a single framework for the definition of calculation runs across all
applications (Market Risk, Credit Risk, Operational Risk, ALM, FTP)
Provide a single mechanism for batch execution across applications
provide the ability to trace data calculations across the applications
Capital Planning
System should enable capture of requisite data and for user defined periods for
development of the capital plan at the bank and at sub portfolio levels such as but
not limited to:
• Balance sheet and PL estimates
• Anticipated growth in top line/revenue year on year, profitability margins, costs
• Increase in risk weighted assets
• Capital types, amounts, maturity (for non-equity), capital cost.
• Risk Adjusted performance measures across various business lines and products
The system should have capital planning and budgeting modules for estimating
bank-wide capital for future, stress testing by changing assumptions/
macroeconomic scenarios, allocation across business units, geographies, products
etc., if needed.
Market Disclosure/Pillar-3 Report (as per RBI guidelines on BASEL II/BaselIII).
The system should generate all reports necessary for complying with Pillar-III of
Basel- II/Basel-III norms. These reports include but are not limited to:
Residual Contractual Maturity Breakdown of the whole portfolio broken down by
major type of Credit Exposures
Integrated Risk Management Department, The South Indian Bank Limited.
Page 69
4.2
4.3
4.4
4.5
4.6
4.7
4.8
4.9
4.10
4.11
4.12
4.13
4.14
4.15
4.16
4.17
4.18
4.19
4.20
4.21
4.22
Exposure -weighted average LGD/EAD for each borrower category.
Securitization disclosure (Total outstanding exposure securitized by bank broken
down by type of securitization (traditional/Synthetic), exposure type.
Amount of NPA securitized broken down by exposure type.
Securitization exposure retained/purchased broken down by exposure type. (This
report would be generated for user defined period and as of date).
Report on capital market exposure as required as per RBI requirement – account
wise as per limit and outstanding exposure – on and off balance sheet
Report on exposure to Real Estate – commercial and residential – direct and indirect
Report on exposure to commodities
Report on Interest rate wise break up of advances – segment wise (term loans,
project finance, bills purchased/discounted or negotiated, demand loans, CC, staff
loans etc) as per user defined range of rate of interest
Report on Interest rate wise break up of advances – segment wise - as per user
defined range of rate of interest
Report on position of unsecured exposure – public sector/private sector/rating
wise/interest rate wise/maturity wise
Report on break up of term loans, project finance, bills purchased/discounted or
negotiated, demand loans – as per residual maturity
Report on pre payment of total/ installment of term loans, project finance, bills
purchased/discounted or negotiated, demand loans
Report on segment wise exposure –Report on future draw down schedule for term
loans,project finance and infrastructure projects
Report on single borrower/group borrower exposure – user defined number of top
exposure vis-à-vis prudential exposure limits fixed by bank/regulator
Rating Wise Distribution of Credit Portfolio Report
Audit log report
Overrides performance reports – performance of accounts where there is rating
over-ride or downgrades (Branch wise / region wise /geography wise/level
wise/approving user wise rating cases processed, approved, rejected and pending for
user defined period.
The system should support portfolio-based calculation like Limits Management:
Bank may define a limit cap (may be absolute or % terms) to an industry, borrower,
individual exposure, and bank, sovereign, rating. The system would check the same
and generate reports. What if/Incremental risk analysis by addition of individual
loan portfolio for decision making purpose. Portfolio based calculation should take
into account industry correlation to arrive at capital requirement.
The system should provide facility to generate customized report for user like Top
Mgmt, Risk Management Dept, Regional office, Branch Manager, and Relationship
Manager etc. Graphical representation of reports, wherever required. Access to
certain reports would be restricted to certain groups.
The solution should have the flexibility of viewing the reports at an aggregated level
or at granular level.
The system should be capable of capturing the distinct elements of Tier-1 and Tier-2
capital under Basel-II/Basel-III norms and it should be able to report total Tier-1 and
Tier-II capital at any point of time.
Integrated Risk Management Department, The South Indian Bank Limited.
Page 70
4.23
4.24
4.25
5
5.1
5.2
5.3
5.4
5.5
6
6.1
6.2
6.3
6.4
The system should apply the discount factor in case of subordinated debt based on
RBI guidelines and only eligible portion of subordinated debt should be taken as
Tier- II capital
The system should facilitate the regulatory adjustments made to Common equity/
Tier-1/Tier-2 capital under Basel-II/Basel- III norms by appropriately linking with
source systems/facilitating manual entry. Examples of such regulatory adjustments
are reciprocal cross holdings, unamortized expenditure arising out of second pension
option etc.
Report on credit, market and operational risk information required for compiling the
risk profile template, which is furnished before RBI on a quarterly and annual basis
ICAAP and Pillar 2 Requirements
The system should have a Pillar-II module which supports ICAAP analysis of all
material Pillar-II risks of the Bank and do capital computation, for risks like
concentration risk (branch wise, RO wise, state wise, industry/ sector wise, product
wise, vertical wise rating-grade wise, interest rate-wise, group-wise, borrower-wise
etc), reputation risk, strategic risk, compliance risk, underestimation of risk under
standardized approach, model risk, liquidity risk, interest rate risk, forex risk etc, as
per relevant RBI/ Basel guidelines on Pillar-II.
The system should perform stress testing for each of the credit, market, interest rate,
forex, liquidity, concentration risk on individual basis and aggregate the results of
stress testing. The system should at the same time assist in reporting, back testing
and assessment of capital for Pillar-II risks including impact on account of stress
testing. Additionally, the system should also support aggregation of Pillar-II capital
into Bank-wide capital (regulatory & Economic capital) assessed.
The System should be able to support and have the necessary statistical tools to
validate the material risk estimation methodologies and stress testing methods under
Pillar-2.
The system should have capital planning and budgeting modules for estimating
bank-wide capital for future, stress testing by changing assumptions/ macroeconomic scenarios, allocation across business units, geographies, products etc, if
needed.
The system should be able to generate risk maps, risk charts, reports, trend analysis
etc for Pillar- II risks, various risk dashboards for the users and top management.
Basel-III Requirements
The system should have the capability for computation of non-risk based leverage
ratio as per RBI/ Basel-III guidelines. The system should have the flexibility to
enable reporting and estimation of each capital components like common equity,
Additional Tier-1, Tier-2 etc as per prescribed guidelines of RBI under Basel-III.
The Pillar-1, Pillar-2 and Pillar-3 modules should be compliant with RBI‟s Basel-III
requirements also.
The system should be capable to compute Liquidity ratios (LCR,NSFR and stock
approach ratios) as per Guidelines on Liquidity Management under Basel III
System should have the capability to compute CVA under Basel-III guidelines.
The system should be able to compute capital requirement for bank‟s exposure to
central counter parties
Integrated Risk Management Department, The South Indian Bank Limited.
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7
7.1
IX.
Sl. No.
1
1.1
1.2
1.3
1.4
1.5
1.6
2
2.1
2.2
Overall Functionality
The solution should have the functionality to extract computed Credit Risk capital
numbers, computed Operational Risk capital numbers, computed Market Risk
capital numbers, Pillar-II capital numbers if any (e.g. for concentration risk), PillarII stress testing capital and Pillar-III capital (if any) from the respective systems /
applications and compute the overall CRAR (Capital to Risk Weighted Assets
Ratio) of the Bank for regulatory and internal reporting
FUNCTIONAL REQUIREMENTS OF ALMS
ALM Functional Requirements
Computation Requirements
generate cash flows for all assets and liabilities with or without embedded
optionality, by utilizing market or internal data, or by means of behavioral analysis
as appropriate
bucket each on- and off-balance sheet asset and liability in line with extant RBI
guidelines for SLS, Interest Rate Sensitivity – TGA and Interest Rate Sensitivity –
DGA. Also allow user to define custom buckets for additional analysis.
compute coupon, yield for each bucket and the macaulay duration, modified
duration and modified convexity as applicable to each on- and off-balance sheet
asset and liability in line with RBI guidelines on DGA computation, incorporating
data from market sources as well as bank internal sources
evaluate the bank‟s position with respect to various duration, maturity-mismatch and
any other limits established in the system by the Bank to monitor ALM position
across geographies, portfolios and jurisdictions
generate automated threshold alerts and drill-down reports on any breaches of limits
established in the system
Allow bank to define new products, new coupon/yield computation logic and new
bucketing rules without extensive rework and recoding.
Behavioral Analysis
allow user to configure behavioral analysis using RBI guidelines, trend analysis,
historic data and user inputs for at least the following assets and liabilities with no
contractual maturity, from the perspectives of SLS and IRS reporting:
Current and Savings Bank Deposits
Overdue Deposits
Term Deposits
Bills Payable
Cash Credit and Overdraft (CC/OD)
Prepayment of Term Loans
Un-availed Portion of CC/OD/WCDL
Devolvement of LCs/Guarantees.
provide a choice of statistical models to analyze behavior of assets and liabilities,
including but not limited to, the following:
Drawdown analysis
Rollover analysis
Prepayment/Early redemption analysis
Integrated Risk Management Department, The South Indian Bank Limited.
Page 72
2.3
2.4
2.5
3
3.1
3.1.1
3.1.2
3.1.3
3.1.4
3.2
3.2.1
Past due analysis
back test behavioral analysis assumptions by means of industry standard tests
(Conditional coverage tests, unconditional coverage tests, duration tests, etc.), in
order to assess accuracy of expected behavior.
compare and tabulate expected versus actual historic behavior and enable an
analysis of reasons for deviation, if any
allow user to tweak behavioral study assumptions and provide estimates of changed
behavior to enable accurate recalibration
Liquidity Risk Monitoring
Liquidity Risk
Monitor daily risk positions through cash flow gaps and maximum cumulative
outflow measurements. Intra-day bank liquidity position and currency-wise open
position reporting included in this requirement.
generate and monitor all ratios relevant to liquidity, including but not limited to, the
following:
Liquidity Coverage Ratio and Net Stable Funding Ratio in line with RBI guidelines
on Basel III implementation
Market Value of unencumbered High Quality Liquid Assets (HQLA) required for
the bank to meet regulatory liquidity coverage ratio requirements
Actual vis-à-vis regulatory levels of CRR and SLR
Regulatory monitoring ratios:
(Volatile liabilities – Temporary Assets)/(Earning Assets – Temporary Assets)
Core deposits/Total assets
(Loans + mandatory SLR + mandatory CRR + Fixed Assets)/Total Assets
(Loans + mandatory SLR + mandatory CRR + Fixed Assets)/Core Deposits
Temporary Assets/ Total Assets
Temporary Assets/ Volatile Liabilities
Volatile Liabilities/Total Assets
Impact of stress scenarios such as drying up of funding sources, increased market
volatility, bank-run, etc. on the bank‟s liquidity position
Utilization against contingency plan triggers and limits
Any other ratio required by the Bank from the perspective of stock approach
liquidity management (Swapped Fund Ratio, Credit Deposit Ratio, Loan losses to
net loans, etc.)
allow user to configure liquidity ratios and trigger/limit levels through a graphic user
interface, defining the numerator and denominator out of bank balance sheet inputs
provide an overall consolidated view of the total market liquidity risk faced by the
Bank by virtue of its current portfolio
Liquidity Stress Testing
possess a robust stress testing engine to simulate systemic and specific events
including but not limited to, the following
Deterioration in firm‟s credit rating
Run-off of non-contractual liabilities using statistical approaches
Periods of combinations of sudden and prolonged market volatility
Greater than expected drawdown of non-fund based exposures
Integrated Risk Management Department, The South Indian Bank Limited.
Page 73
3.2.2
4
4.1
4.2
4.3
4.4
4.5
4.6
4.7
4.8
5
5.1
i.
should be capable of analyzing the impact of concentration of funds by source,
borrowers and currency to identify significant sources of market liquidity stress
Scenario Analysis
produce budgetary and customer scenarios defined by type of contract.
scenario-dependent projections of future earnings, balance, market values, yields,
cash-flows, etc.
measure earnings effects, future liquidity risk, and product-inherent optionality risk
allow user to simulate new business, by defining volume projections, instrument
characteristics, price rate models, and maturity schedules
perform income simulation: Future Earnings and capital requirements.
provide a robust cash flow engine as part of the system that supports at least, but not
limited to, the following:
Conventional amortization (EMI)
Annuity payments with fixed maturity
Annuity payments with variable annuity
Principal only
Balloon/Bullet/Staggered payments
Amortization for floating rate instruments
Customized (user-supplied) amortization schedules
Negative amortization
NPAs and Restructured accounts
Instruments such as Bonds, Swaps, Repos, Reverse Repos, CDS, futures, options
(cash-flow, swap, cap/floor) and forward rate agreements
Instruments without embedded optionality (E.g., CASA deposits)
Off-balance sheet assets and liabilities without defined maturities (E.g., LCs, LGs)
model instrument / account level prepayment assumptions by, but not limited to, the
following methods:
By specifying a constant flat percentage of the current balance
By specifying prepayment rates based on either age, term or rate characteristics
By specifying mathematical relationships between prepayment rates & bank lending
rates/spreads over base rate
By incorporating seasonality adjustment factors based on past xperience for
prepayments
support the choice of at least the following term structure models (including
noarbitrage
models):
Merton
Vasicek
Ho & Lee
Extended Vasicek
Data Requirements
Market Data Sourcing
capture price/volatility/spread data relating to a broad range of products from
different data providers, to allow the Bank to record its current and likely future
treasury activities accurately, including, but not limited to, the following:
Fixed Income Investments (Central Government Securities, State Government
Integrated Risk Management Department, The South Indian Bank Limited.
Page 74
ii.
iii.
iv.
v.
vi.
vii.
viii.
5.2
i.
ii.
iii.
iv.
v.
vi.
Securities, Other Approved/SLR Securities, Treasury Bills, Cash Management Bills,
Corporate Debt, Commercial Paper, Certificates of Deposit)
Stock Investments (Equity, Preference Shares and Mutual Funds)
Lending and Borrowing Operations (Repo Transactions, Reverse Repo
Transactions, Interbank Lending Operations, Central Bank Lending Operations, Call
Money, Notice Money, Refinancing operations - NABARD, SIDBI)
Over-the-counter and Exchange traded Derivatives (Exchange Traded Futures,
IR/Fx Swaps, Credit Derivatives, Cross currency swaps, Fx Options, Interest Rate
Options, Forward Rate Agreements)
Allow addition of new market data sources. E.g., configure the system to obtain
equity price information from Bloomberg in addition to Reuters
source time stamped market data (e.g., Open/ High/ Low/ Close) across multiple
markets, taking to account varying business hours
allow user to configure intraday timings for sourcing market data
allow user to configure change in market data source as either temporary or
permanent
allow user to configure alternative data source in case of failure of primary source
system (E.g., BSE prices when the NSE price feed suffers disruption)
Obtain information from external sources on historic values of various risk factors
(E.g., equity index and individual equity prices, forex prices, commodity prices,
spreads over benchmark curves for Bank/PSU/FI/Corporate rated bonds, etc.)
relevant to market risk computations. Historic data for at least last 5years should be
available.
allow modification of input price/curve data as required by the pricing model, e.g.
transforming quarterly quotes into monthly prices
Static & Reference Data Sourcing
source reference data from relevant sources including:
Instrument reference data for (past, current and future) traded products. (E.g.,
Bloomberg/Reuters/FIMMDA ticker, Index constituents, etc.)
Internal Desk/Book hierarchy data
Product hierarchy data (e.g. relationship of asset classes, instruments and
subproducts
Counterparty data including a standardized, organization-wide counterparty
hierarchy
Calendar / business day conventions
Static data values (e.g. country codes, currency codes etc.)
allow definition of new reference data types and modification of pre-defined data
types (E.g., addition of a new level in the product hierarchy)
allow sources of reference data to be changed, and the reference data should have an
attribute identifying data source
support all types of day count basis including 30/360, Actual/360, Actual/365,
Actual/Actual, 30E/360
support International Swaps and Derivatives Association (ISDA) -defined business
day conventions such as following, modified following, preceding, next month, this
month, average of the month etc.
support user defined reprising to input changes in asset prices that do not flow from
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data feeds
Holiday Calendars
load calendar schedules from external sources including but not limited to SWIFT,
International Holiday schedule and Bloomberg holiday schedule etc.
allow users to set calendar schedules through interfaces/ patch updates
allow configuration of multiple holiday tables for each currency and country
allow users to input calendar schedules at least 7 years forward
edit and override global calendar and holiday tables
flag trades executed on a global holiday through exception messages and exception
reports
define settlement instructions based on emergency holidays
model cash flows and interest accruals based on holiday calendar and standard day
roll conventions
Position Data
retrieve position data from treasury system to perform valuations
allow user to create, save and load portfolios of bank‟s position in various
instruments/ currencies
automatically recalculate the trade or portfolio value if (relevant) market rate
changes are detected
allow user, based on access rights, to create portfolios across all dimensions (E.g.,
Bank-wide, HFT/AFS/HTM, Trading Book, commodity, Risk factor, individual
position, Trader, currency, delivery location, Trade type, Time bucket, etc.)
support different types of portfolio revaluation methodologies: marginal, full, no
recalculation, manual, timed (i.e. every 10 minutes, batch), etc., or any portfoliowise combination of the same
provide various options to value the Bank‟s investment portfolio: current market
rates, freeze current market rates (snapshot), etc.
facility to specify if portfolio should be loaded as of a specific date in the past
select Position / Price / Liquidation methodology for aggregated positions: Average
Cost, LIFO, FIFO, Max Profit, Least Profit, User defined
display information at trade and portfolio levels
display valuation results using drill down capabilities (e.g. Local Currency, Base
Currency, Reference Currency)
display portfolio results, where possible, by a user definable maturity grid
bucket portfolio open positions into the maturity grid using industry standard
methodologies: Previous Bucket Point, Following Bucket Point, Proportional ,
Nearest, Delta Equivalent, Proprietary, etc.
create, name, save and load portfolio „views‟ as result of the previous choices
provide Hedge Effectiveness Testing and Portfolio Optimization functionalities. I.e.,
the system should be able to compute the effectiveness of hedges as well as to
determine the optimal portfolio composition given various constraints (E.g.,
minimum/ maximum investments in certain assets)
Data Upload
time stamp and record data source for each data upload
allow user to decide the frequency and mode of data upload, e.g., timed update or
continuous update
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5.7
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5.8
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upload position, rate and valuation information of the investment portfolios of local
as well as overseas branches to allow consolidated reporting
Data Overrides and Adjustments
allow users to apply adjustments to address erroneous values via single point
changes or mass updates
log data corrections and communicate the same to relevant upstream/ downstream
systems
maintain an audit trail of data changes made by users
allow reversal of changes made based on access rights given to different levels of
users
Data Validation
validate user entered data at the time of data sourcing, preferably by field input
controls, e.g., format of input, date checks, etc.
support configurable data checks on consistency and integrity of all data inputs
(market data obtained from different data providers, position data from treasury
systems, etc.). The checks should be configurable on single data points as well as on
groups of data, e.g., curves
support validation of uploaded data by means of business rules with configurable
parameters
ensure that there are effective checks and controls to ensure that transactions are not
loaded multiple times in the host system, i.e., duplication checks
perform data validation to reconcile position data in the treasury system with market
risk system
Data Storage and Archival
store on a daily basis the following information:
Position and transaction data at a granular level present in the Bank‟s portfolio
Market data (yield curves, volatility curves, Fx Spot and Forward prices , FX
volatilities)
Market prices (for quoted instruments) and book value for instruments that are not
traded often
Net Present Values(NPV), MTM and Greeks at transaction and aggregated levels
Value-at-Risk at transaction and aggregated levels
Scenario Results at transaction and aggregated levels
Profit & Loss results at transaction and aggregated levels
import historical market prices files from external vendors for volatilities and
correlations calculations for transactions on new markets
import historical position information either directly from existing systems or in the
form of data upload files to allow easy system migration, generation of historical
results and also to mitigate the impact of incorrect data uploads
store historical market rates information through automatic end-of-day procedures
and historical results for at least 10 years
store the complete set of data used as input to calculations performed by the system
allow users to view complete data snapshot of any previous business day
support storage of all current and historical position, market and reference data on a
daily basis, and allow users to view the complete set of data for any given day
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6
6.1
6.1.1
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iii.
6.1.2
6.1.3
6.2
6.2.1
6.2.2
6.2.3
6.2.4
6.2.5
6.2.6
store system-generated data points (e.g. interpolated values), with configurable flags
determining whether or not data is stored
transform data from source format to a standard format for storage/ archival
provide data mining functionalities (e.g. identifying from a set of historical data the
worst one month/quarter/year)
support archiving of data that are beyond a specified time horizon
export data to secondary storage device without down-time
support data retrieval from the specified archives. The archival and retrieval
programs should facilitate easier analysis of old data.
in-built Data warehousing capabilities or standard interface with Data warehousing
solutions
Data Quality and Statistics
provide an analysis of data quality, i.e., completeness and accuracy of inbound /
outbound data feeds and reporting on key data quality metrics
provide a tool for automatic verification and validation of uploaded data with
appropriate measure of correction
Reporting Requirements
Aggregation and Drill-down Capabilities
record information to identify various dimensions of ALM reporting from the
perspective of aggregation, including, but not limited to:
multiple currencies: To handle all currencies the Bank has rate-sensitive exposure
to. The system should also be able to convert all currencies to the Bank‟s reporting
currency (INR) using FEDAI spot rates
multiple departments: To allow rule-based access to different departments as
required
multiple products and product categories: To handle all risk sensitive assets and
liabilities that may be present in the Bank‟s portfolio
allow rule-based aggregation to identify exposures across each dimension above
drill-down from the interest rate sensitivity, structural liquidity and any other
analysis to a granular level (E.g., Product level, portfolio level, geography level,
etc.)
Reporting and Analysis
reporting should be compliant with regulatory requirements
predict possible business volumes, maturity patterns, etc. utilizing historical data
and simulation
report at any level of detail (drill down and aggregate)
build customizable hierarchical roll up structure
provide graphical representation of reports as appropriate report across product,
account, and business unit
perform the following analysis:Interest Rate Risk in the Banking Book and Trading Book: Interest Rate Sensitivity
Analysis – Traditional Gap Analysis and Duration Gap Analysis
Structural Liquidity Analysis
Re-pricing balance sheet/gap analysis
Cash flow balance sheet
Breakup of cash flow and balance sheet into deterministic (contractual assets and
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6.2.8
liabilities) and dynamic (non-contractual assets and liabilities)
Market value balance sheet (present values)
Value effect: economic value sensitivity key rate duration
Scenario analysis (parallel shifts, non-parallel shifts)
Trend analysis
Static profitability analysis: yield report
Effective yields
Market Value Sensitivity (MVS)
Market Value of Equity (MVE)
NII and NIM analysis
Behavioral analysis for rate sensitivities with embedded optionality
generate standard reports for following:
RBI mandated Structural liquidity reports:
Domestic Currency – Indian Operations
Foreign Currency – Indian Operations
Combined Indian Operations – Domestic and Foreign Currency
Overseas branch Operations – Country-Wise
Consolidated Bank Operations
RBI mandated Interest Rate Sensitivity reports to monitor Interest Rate Risk in the
Banking Book and Trading Book:
Traditional (Static) Gap Analysis
Duration (Dynamic) Gap Analysis
RBI mandated Short Term Dynamic Liquidity Statement
Currency-wise mismatch reports
Cash flow projections
Bucket-wise mismatch reports
Variance analysis
Mark to market reports
Net Interest Income reports
Economic Value of Equity Analysis
Product/ Account Level Profitability Analysis
Line of Business Level Profitability Analysis
FTP Division of spread analysis, by lending, funding and interest rate risk spreads
Total Organizational Level Profitability Analysis
Cost of Fund by Product/Account
Net Interest Margin Analysis
Key early warning/risk indicators
Status of contingent funding sources
Interest Rate Risk Analysis/Reporting
Value at Risk Analysis and Reporting
Earnings at Risk Analysis and Reporting
Market Value - deterministic and stochastic
Scenario Income reports
Gaps statement based on contractual maturity
provide querying facilities to build own queries
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6.4
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6.5
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ii.
6.6
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6.7
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v.
Report Customization
provide a user-configurable ALM dashboard
provide user-definable time buckets
provide user-definable chart of accounts, classification, sub-classification, maturity
buckets, reference rates, yield curves, currencies etc.
Ratio Builder, which allows users to define any number of categories and ratios
support custom report designing
allow users to specify the exact layout of the required report including location of
fields, header, footer, page numbering, title etc.
allow users to define structures and fields of each report by selecting fields from
databases of their choice
provide a report writing wizard that provides users with step by step menus and
allows them to draw up reports in the required format
allow users to present outputs from reports in the form of graphs, charts and other
graphical representations
allow for sorting of data in reports
isolate and report errors and exceptions
allow user defined filters
customize reports with respect to time period considered, portfolios considered,
levels of granularity, etc.
Scheduling of Reports
generate pre-defined end-of-day, end-of week and end-of month reports
generate pre-defined reports with minimum user interference
define a schedule for reports and reports should be generated as per the frequency
defined by the Bank
allow defining the users to whom reports can be automatically sent
Archiving of Reports
archive historical reports
archive historical rates extracted from market information systems
Ad hoc Reporting
allow users to customize standard reports for their own profile (E.g., different
portfolio, specific time period, comparing with historic results), without affecting
reports generated by other users
allow users to configure what-if analysis to analyze the impact of new positions,
amendments to existing positions, unwinding positions, etc.
General Requirements
generate all regulatory reports required in appropriate regulatory formats
provide pre-configured internal reports in standardized templates, for effective
market risk management.
allow user to configure and generate new ad hoc reports and save report
configuration in user profile
retain historic report information to compare report outputs over a configurable time
period (E.g., previous day or previous month end)
distribute reports according to user-configurable distribution parameters, e.g., email
to a generic inbox, save to a server location, etc.
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7.1
7.2
7.3
7.4
7.5
7.6
7.7
7.8
7.9
7.10
FTP Requirements
provide distinct modules to approach FTP, enabling the user to define the interest
rate environment, interface with the bank systems for information on the product
portfolio, establish costing rules at a desired level of granularity, analyze the cost of
source and use of funds and generate appropriate end user reports
provide flexibility to choose from multiple FTP methodologies (Cost of funds/ Net
Funding/Pooled Funding/Matched Maturity)
generate the Base FTP curve for each use and source of fund on the underlying
account or transaction attributes at the time of origin at a granular account-level
using matched maturity methodologies such as bullet, cash flow and weighted
average life funding
generate the base FTP curve by combination of multiple yield curves for different
maturities, as a combination of:
Treasury rates
Funds pool
Bank cost of funds
Target borrowing rate
Swap curves
CD rates
LIBOR/MIBOR
view FTP rates across at multiple granularities:
product
business unit
branch
Bank/ entity
analyze profitability at various levels by generating the economic value and the
corresponding FTP rates
calculate liquidity cost for:
on-balance sheet assets consuming liquidity based on tenor at origination date and
on marginal cost.
contingent liquidity risk (cost of holding stand-by liquidity buffer to cover
unexpected liquidity needs and cost of roll-over risk)
other categories of possible liquidity risk exposure (E.g., country risk cost due to
extension of funding to clients in non-fungible currencies)
calculate, assign / allocate FTP costs, behavioral models or pricing assumptions
based on the following:
Basis risk
Liquidity risk
Funding rates (Base Government ZCYC rate/ LIBOR/MIBOR)
Fixed rate structural funding cost
Option cost
On-balance sheet and off-balance sheet products
project and price undrawn off-balance sheet items, including contingent
commitments, by means of stress and scenario testing
quantify impact due to change in FTP rates, methodologies, behavioral models,
volumes, changes in key stress assumptions, etc.
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1.1
1.2
1.3
1.4
1.5
1.6
1.7
1.8
1.9
1.10
1.11
1.12
1.13
1.14
1.15
TECHNICAL REQUIREMENTS
Technical Requirements
User Interface
The system should provide a consistent and easy to use graphical user interface
The system should be capable of interfacing with mail clients to generate
notifications and auto-mailers.
The system should provide the facility to upload/download data to/from peripheral
systems to be provided as and when required.
Report Creation utility should be provided for the user to generate new reports
The system should provide user-friendly design, short-cuts, smart tags and other
productivity features
The system should support configurable graphical display of historical, current and
forecast figures and analysis
The system should provide tools for validation of data inputs that are captured from
the existing applications of the bank
The system should provide for validation of data inputs that are subject to re-entry
or manual intervention
System should provide users with the option to print, i.e. print to files of various
formats, print to printer etc.
The functionalities should be menu driven. The menu structure of the system should
be standard
The system should provide online help facility which is context sensitive at field,
screen etc.
The system should have a flat file import and export functionality to import and
export transaction data and/or static data in any of the following formats but not
limited to:· Microsoft Excel Format (.XLS)
· Comma separated values (.CSV)
· Text file (.TXT)
· Microsoft Word (.DOC)
· Adobe Reader (.PDF)
· ASCII (Flat File)
· Web Page(.HTML)
· Extended Markup Language(.XML)
The system should perform queries against database irrespective of the
technology/solution to be implemented. It should store and retrieve data from
existing systems and databases andf should provide an application programming
interface to access outside programs
System should have the provision to have Edit Check
• perform logical edit checks on all input fields
• provide intelligible edit error messaging based on pre-defined parameters to assist
correction and re-entry of data
• reject entries that cause edit errors
• provide ability to over-ride edited errors
The system should allow multiple users to access the system simultaneously
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1.16
1.17
1.18
1.19
2
2.1
2.2
2.3
2.4
2.5
2.6
2.7
2.8
2.9
2.10
2.11
2.12
3
3.1
3.2
3.3
3.4
3.5
The users should have single point of access, to access all functionality available to
their user account through a single entry point.
The system should be able to generate reports as per the Automated Data Flow
(ADF) requirements of the bank.
The system should interface with accounting modules/systems in place at the bank
The system should incorporate customizable templates and Built-in data entry form
for the cases which are not captured through any other business application
System Architecture
The solution should be in web based technology in a three tier architecture
The system should provide for capture and utilization of static/dynamic data
associated with counterparties, products, accounts, etc, from the existing
applications in the Bank such as Core Banking Software, Treasury systems, HRMS,
FAMS etc.
System should be able to Extract, Transform and Load data from the source systems
The system architecture should be modular; separate modules of the system should
run independently
Bidder to provide all updates/modifications on account of regulatory requirements
affecting domestic or international operations in respect of the Operational Risk
Management System, including Advanced Approaches under Basel II without any
additional licensing costs during the implementation and AMC period.
Up-gradation to Basel III should be possible with the proposed solution
The solution should be flexible and Expandable to accommodate future up
gradation/ modifications.
System outage time due to events such as server down, application down etc. should
not exceed the minimum tolerable downtime defined by the bank for the application.
Overnight reports generated by end-of-day processing should be ready at a time
agreed in the system SLAs on business days for each time zone
In the case of a system failure with no loss of data, restore to an operational state
within standard hours of service as defined in the SLA.
In the case of a system failure and the loss of data integrity, restore to an operational
state with the most recently backed up data within an acceptable timeframe as
defined in the SLA.
In the case of a system failure mid-processing, resume all processes at an interim
point if possible and reasonable and if resulting in significant re-processing
computation time savings.
The system should support prioritization functionality to ensure standard processes
have sufficient resources to run within required timelines without being affected by
ad hoc user requests.
Data Archiving Back up & Disaster Recovery
System should support archiving of data that are beyond a specified time horizon, to
prevent long term speed concerns.
The system should allow have a day end back up process
The system should also have recovery features in case of system failures
Back up should be possible in external media (CD, tapes, DVD) for off‐ site storage
System should support archiving of data that are beyond a specified time horizon
with facility to parameterize.
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3.6
3.7
3.8
3.9
3.10
3.11
3.12
3.13
4
4.1
4.2
4.3
4.4
4.5
4.6
4.7
4.8
4.9
4.10
4.11
4.12
Export of data to secondary storage device should be supported by the system
without down time.
System should support data retrieval – from the specified archives. The archival and
retrieval programs should facilitate easier analysis of old data.
The system should generate error logs if the calculation fails during time of data
processing
The error logs should be descriptive enough to allow traceability of the data/function
error to the most granular level
The solution should have suitable Business Continuity Plan and structure to achieve
“solution availability”
The solution should support disaster recovery procedures to 'cutover' from a primary
site to a secondary site
The solution should resume processing using the disaster recovery secondary site
within the time limits stipulated by the bank from time to time
Performance requirements of the secondary disaster recovery site, when activated,
should exactly match those of the primary site
Security management & Audit Requirements
The system should provide for user profiles to be controlled by a specific
administrator
System access should be permitted only through password verification with all user
IDs being unique
Addition of new software features should be allowed only through a properly
revised upgrade and data migration method. Proper Change Management System
should be followed.
The system should have the ability to provide or restrict access privileges based
upon hierarchy and multiple criteria eg. user access on weekends and holidays,
hours through which the system would be accessible etc
The system should allow for setting of each user profile from front end screens.
User privileges to be defined on need to know basis.
Standard password management features should be configurable as per Bank's
policies e.g.
Strong password control features such as minimum/maximum length, alphanumeric, special characters , history of passwords etc
· Automatic user disabling after a certain number of successive erroneous tries
prescribed by bank
· Automatic user time-out on inactivity for a predefined time duration
System should provide for creation, deletion and modification of users, upgrades of
users and data access rights
User id and login should determine level of access to data e.g. read/view data, print
data, write/modify data, delete data etc.
There should be a maker-checker facility for key functions in the system
System should allow data access to users only through screens
The system should maintain the audit trail with details like user id, Date-time etc.
There should also be audit trail that includes details of databases accessed and
modified by the users.
The audit trail should be at the granular level, and track the user across each activity
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4.13
5
5.1
5.2
5.3
5.4
5.5
5.6
5.7
5.8
5.9
5.10
5.11
5.12
5.13
The system should have the ability to store and track all system events, including
corrections and cancellations by multiple criteria such as user details, timestamp etc.
Changes made should be able to be rolled back to a previous state.
Reporting & Others
The system should provide all necessary regulatory reports pertaining to Banks as
required by the Reserve Bank of India and/or as requested by the Bank.
System should provide various other reports in the formats to be provided by the
Bank. Important MIS reports should have the facility for drill-down where necessary
in risk reporting, management reporting, internal capital allocations and risk analysis
The reporting functionality should cover all areas of risk exposures and different
types of reports should be structured for Strategic Business Units, Senior
Management and Board of Directors
The calculation formulae, data flows and processes associated with the risk
measurement system should be transparent and easily accessible. In particular, it is
necessary that auditors and supervisory authorities are in a position to have easy
access, whenever they judge if necessary and under appropriate procedures to the
system‟s specifications and parameters
The system should allow users to present outputs from reports in the form of graphs,
charts and other graphic representation in a user friendly set up
The system should have capability to report against multiple dimensions
simultaneously. The system should provide Dash boarding capabilities with specific
access rules defined for each user.
The reporting interface should be capable of interactive reporting with end user
having the option to create report across multiple dimensions in real time. The
system should be capable of generating alerts and trigger workflows based on
business events and notify stakeholders via their preferred medium and channel.
Exception reports should be sent to pre-defined users either through auto-mailers via
the email client or via pop ups within the system.
The system should be flexible in allowing users to specify the exact layout of the
required report including selection of data fields, location of data fields, header,
footer, page numbering, title etc. No additional technical effort should be required to
develop reports by the end user.
The system should allow reports to be exported into Microsoft Excel, Adobe PDF
format and other databases
The system should allow users to print reports directly from the system
The system should allow users to save reports to a disc in a non-editable as well as
an editable format
The system should generate reports in various types of files like:
· View Mode
· Excel Mode
· Text Mode
· HTML Table
· CSV format
· Word File
· PDF format
· XBRL format
Integrated Risk Management Department, The South Indian Bank Limited.
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5.14
5.15
5.16
5.17
6
6.1
6.2
6.3
6.4
6.5
6.6
6.7
6.8
6.9
6.10
BRL format
The system should allow for generation of pre-defined end-of-day, End-of week and
end-of month reports and ad-hoc reports when required
Reports generated in periodical wise or as defined by the Bank:
· Daily
· Weekly
· Fortnightly
· Monthly
· Quarterly
· Half-yearly
· Annual
The system should allow for archiving of external reports in the following formats
· Adobe PDF
· Microsoft Excel
· Microsoft Word
· Microsoft Access
· Comma separated values (.CSV)
Archiving of reports should be possible in a pre‐ defined format to facilitate ease of
retrieval
Reports generated by the system should be in XBRL format whereas system should
have capability to generate internal reports in PDF format.
General
The system should process, track and account for the necessary range of traded and
non traded currencies which includes USD, INR, EUR, AUD, CHF, JPY, GBP,
CAD, SGD, HKD, CNY,DKK, SEK etc.
The system should handle all types of day count basis including 30/360, Actual/360,
Actual/365, Actual/Actual, 30E/360
The system should load calendar schedules from external sources including but not
limited to SWIFT, International Holiday schedule and Bloomberg holiday schedule
etc.
The system should handle multiple entities that includes branches, subsidiaries etc.
The Bidder should provide a Data Mart to generate analytical reports to be used /
viewed by the Bank.
The proposed Data Mart should be able to integrate with the Enterprise-wide Data
warehouse solution which is going to be implemented in the future
The system should be capable to integrate with multiple types of transaction systems
and other existing applications of the bank
System should be capable to integrate with non transaction systems like Ratings
Data providers, Banks Internal Model/External model, CIF systems
System should be capable to integrate with standard domain controllers using
multiple integration mechanisms
Flexibility of system
• Allow for changes to be made to existing methodologies (e.g. reconfigure models,
change process steps in models etc.) and allow for the addition of new
methodologies via the necessary support intervention.
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7.1
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8.1
8.2
XI.
• Allow users to add, remove or amend data feeds, without requiring a change to the
system itself.
Integration
Integration with other systems should be facilitated by the following modes but not
limited to:
· Batch processing
· Online processing
· Real time processing
Documentation
Please list the availability of various documentations provided with your product(s)
such as
a) User manuals; Will be provided to the bank as per the standard documents
available
b) System Administration manual- Standard Technical manual will be provided to
the users.
c) System manuals – Application Architecture, Entity-Relationship diagrams, Data
base Scheme, Data dictionary, Source code.
d) Documents narrating the mathematics, the assumption in all the Models/Pricing
engines used in the software
e) Error Messages and their meanings.
f) Training Manuals
Comprehensive documentation with indices or glossaries targeted at specific
audience of users, systems manager/administrator.
AMENDMENT OF RFP:
 At any time prior to the deadline for submission of bids, The South Indian Bank Limited, for
any reason, whether at its own initiative or in response to a clarification requested by a
prospective Bidder, may modify the RFP by amendment.
 In order to afford prospective Bidders reasonable time in which to take the amendment into
account in preparing their bid, the Bank, at its discretion, may extend the deadline for the
submission of bid.
 All bidders who have procured this RFP document from the Bank shall be notified of the
amendment in writing by e-mail or fax or post, and all such amendment(s) shall be binding
on them.
XII.
INSTRUCTIONS FOR BID SUBMISSION
A. Request for Additional Information
 Bidders are required to direct all communications for any clarification related to this RFP, to
the Designated Bank officials and must communicate the same in writing (address for
communication is given in table titled „Bid collection and submission details‟ ). All queries
relating to the RFP, technical or otherwise, must be in writing only i.e. either via physical or
electronic mail. The Bank will try to reply, without any obligation in respect thereof, every
Integrated Risk Management Department, The South Indian Bank Limited.
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reasonable query raised by the Bidder in the manner specified.
 However, the Bank will not answer any communication reaching the Bank later than 2.00 PM
on 15.03.2014.
B. Modification and Withdrawal of Bids
 The bidder may modify or withdraw its bid after the bid‟s submission, provided that The
South Indian Bank Limited receives written notice addressed to CGM - Integrated Risk
Management Department, SIB House, 2nd Floor, Mission Quarters, Thrissur, and Kerala680001 of the modification or withdrawal, before the expiration of deadline prescribed for
submission of bids. In case of modifications, the bidder is expected to resubmit entire bid.
Only addendums/amendments will not be accepted.
C. Rejection / Acceptance of Bid
 The South Indian Bank Limited reserves the right to accept or reject any or all the bids
without assigning any reason whatsoever. Any decision of The South Indian Bank Limited in
this regard shall be final, conclusive and binding on the bidder.
D. Cancellation of Bid
 The South Indian Bank Limited reserves right to re-issue/re-commence the entire bid process
and or any part in case of any anomaly, irregularity or discrepancy in regard thereof without
assigning any reason whatsoever, at the sole discretion of The South Indian Bank Limited.
Any decision in this regard shall be final, conclusive and binding on the bidder.
E. Period of Validity of Bids
 Validity Period: - Bids shall remain valid for 90 days from the last date specified for
submission of bis in this RFP. The South Indian Bank Limited holds the rights to reject a bid
valid for a period shorter than 90 days.
 Extension of Period of Validity: - In exceptional circumstances, The South Indian Bank
Limited may solicit the Bidder‟s consent to an extension of the validity period. The request
and the response thereto shall be made in writing. Extension of validity period by the Bidder
should be unconditional and irrevocable.
XIII. SUBMISSION OF BIDS
A. Mode of submission
 The bidder shall submit bid in a sealed and marked outer envelope. This outer envelope shall
be marked as “ORIGINAL: Implementation of Enterprise-wide Integrated Risk Management
Architecture in accordance with the International Best Practices and Guidelines of
Integrated Risk Management Department, The South Indian Bank Limited.
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RBI/BCBS on Basel II, Basel- III, ALM and FTP. In case the bidders opt to remit the non
refundable bid submission fee by way of DD, the DD shall be safely kept in the outer
envelope. If the bid submission fee is by way of RTGS, the UTR number shall be furnished.
In addition to the DD/UTR challan, this outer envelope shall contain following envelopes:
1. Envelope labelled as „Eligibility criteria‟:- This envelope shall contain the documentary
proof and annexure required if any in respect of each of the criterion listed out in SectionXVI. The check list for submission of eligibility criteria is given in Annexure-4. This
envelope shall without fail contain the profile of bidder and his partner if any as specified in
Annexure-5
2. Envelope labelled as „Technical Bid‟: - The contents of this envelope shall assist us in
evaluation of technical and functional requirements of the software solution. This envelope
shall contain six inner envelopes, one each for Credit risk, Market risk, Operational risk,
ALM system and other functional capabilities (i.e integration, Pillar- 2, Pillar-3 and Basel-III)
and one for technical requirements. The inner envelopes shall contain the responses against
each of the functional/technical requirements under respective areas. The manner in which
the responses should be submitted is indicated in Section XVII.A. In addition to the hard
copy of the responses the envelope shall contain a CD containing the soft copy of responses.
 It is mandatory to furnish the Technical & Functional Specification in the format attached in
the spread sheet uploaded along with this document. The hyperlink for downloading the
specifications is given below
Click on Logo to download
 The correct information of the functional capabilities of product being offered should be
reflected in the responses. Any additional information available, though not included in the
form, may also be submitted. The format in the spread sheet has provision to indicate your
offer as well as deviation, if any.
 In addition to the six envelopes mentioned above this envelope shall also contain a seventh
inner envelope. This seventh envelope shall contain all other contents of technical bid
specified in this section.
Content of technical bid
 Implementation methodology as given in Annexure-6
 Responses against functional and technical requirement specified in this RFP (as
indicated in above paragraphs).
 Reference site details in the format specified in Annexure-7
 Details of past experience as specified in the Annexure-8
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 The proposed project team profile as given in Annexure-9
 The details of training programs conducted by the bidder in format specified in
Annexure-10.The documentary proof in support of these programmes in the customerBank‟s letter head shall also be included in this envelope.
 Any other relevant information
3. Envelope titled „Commercial Bid‟: - The commercial bid should be given by the vendors in
the format as shown in Annexure -12. The Bidder is expected to quote unit price in Indian
Rupees (without decimal places) for all components (hardware, software etc.) and services on
a fixed price basis as part of the commercial Bid inclusive of all costs and taxes like customs
duty, excise duty, import taxes, freight, forwarding, insurance, delivery, installation, training
etc. at the respective delivery location of the Bank but exclusive of only applicable (in India)
Sales Tax/VAT, Service Tax and Octroi / Entry Tax / equivalent local authority cess, which
shall be paid / reimbursed on actual basis on production of bills. Further, receipts of such
payments made to relevant authorities must be produced for Octroi / Entry Tax / equivalent
local authority cess. The Bank will not pay any other taxes, cost or charges.
 The price should be quoted for each item, each unit with total cost, module wise, if modular.
Prices for all items including optional items, if any, should also be mentioned. AMC for
each item year wise should be provided. The envelope labelled as commercial bid should
include the following:
 The bid covering letter cum declaration format is given in Annexure-11
 Details of cost of deliverables for each risk management system (also include cost of
integrated solution with all modules.)in the format given in Annexure-12
 Annexure-13 containing the total cost of ownership computation
4. Envelope titled „Annexures‟: - This envelope shall contain all the Annexures specified in
this RFP, except for the annexures stipulated to be included in other envelopes. It shall also
include documentary proof required for substantiating the information given in Annexure, if
any. In addition to the annexures specifically listed out in this RFP this envelope shall also
include:
 Technology, architecture of proposed solution, exact tools to be used
 List of all software / tools to be used together with licensing details
 Tentative project time schedule and plan
 Project management, control and tracking mechanism
 Quality control setup and procedures to be followed
 Implementation & Training plan
 Technical brochures and user manual
 All envelopes should reach the Bank before 28th March 2014. All envelopes should be
securely sealed and stamped.
Integrated Risk Management Department, The South Indian Bank Limited.
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XIV. ADDITIONAL INSTRUCTIONS FOR BIDDERS
A. Source Code
i. Bidder has to keep source code of proposed solution with approved / recognized escrow
agency under escrow arrangements mutually acceptable to the Bank and Bidder but at
Bidder‟s cost.
ii. The application software should mitigate Application Security Risks, at a minimum; those
discussed in OWASP top 10 (Open Web Application Security Project)
iii. The Bank reserves the right to audit the Application / Source Code by suitable Security
auditor.
iv. The Bidder shall provide complete legal documentation of all subsystems, licensed operating
systems, licensed system software, and licensed utility software and other licensed software.
The Bidder shall also provide licensed software for all software products whether developed
by it or acquired from others as part of the project. The Bidder shall also indemnify the Bank
against any levies / penalties on account of any default in this regard.
v. In case the Bidder is coming with software or hardware which is not its proprietary software
or hardware, then the Bidder must submit evidence in the form of agreement it has entered
into with the software vendor or hardware vendor which includes support from the software
vendor or hardware vendor for the proposed software and hardware for the full period
required by the Bank.
vi. The bidder needs to produce certificates of quality control and security audit done on the
software in the recent past.
B. Software Delivery & Installation
 The bidder will provide the complete compiled code. The bidder will supply the automated
Installation procedures. The bidder will install the application software on computers
(servers and selected desktops) of the BANK for Pilot implementation. Vendor will also
provide two sets of backup copies. The installation of the base product will be considered
complete only after demonstration of functional features of the software as given in RFP and
as per documented procedure and as acceptable to the Bank.
 The solution must comply with all applicable requirements defined by any regulatory,
statutory or legal body which shall include but not be limited to RBI or other Regulatory
Authority, judicial courts in India and as of the date of execution of Agreement.
C. Acceptance of software
 The BANK will accept the developed/ customized software only after implementation of the
software with successful conduct of acceptance testing by users. Software will be considered
to be accepted only after the BANK issues an acceptance letter to the vendor. New Software
Integrated Risk Management Department, The South Indian Bank Limited.
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may be audited for risk analysis and security features by Bank‟s IS Audit team or a third
party vendor appointed by the BANK, if so desired by the BANK.
D. Inspection and Tests
i. Bank or its representative shall have the right to inspect and/or to test the software to
confirm their conformity to the requirements/specifications mentioned in this RFP at no
extra cost to the Bank.
ii. The inspections and test may be conducted on the premises of the vendor or its
subcontractor(s), at point of delivery and/or at the final destination. If conducted on the
premises of the vendor or its subcontractor(s), all reasonable facilities and assistance,
including access to drawings and production data, shall be furnished to the inspectors at no
charge to the Bank.
iii. Should any inspected or tested software fail to conform to the specifications, the Bank may
reject it, and the vendor shall either replace the rejected software or make alterations
necessary to meet specification requirements free of cost to the Bank.
iv. In case of failure to complete the testing for reasons attributable to the Vendor, all the
expenses incurred by the Bank or its representative towards travel, boarding and lodging in
this regard should be borne by the Vendor.
E. Information Ownership
i. All information processed, stored, or transmitted by successful Bidder‟s software belongs to
the Bank. By having the responsibility to maintain the software, the Bidder does not acquire
implicit access rights to the information or rights to redistribute the information. The Bidder
understands that civil, criminal, or administrative penalties may apply for failure to protect
information appropriately.
ii. Any information considered sensitive by the Bank must be protected by the successful
Bidder from unauthorized disclosure, modification or access. The Bank‟s decision will be
final.
iii. Types of sensitive information that will be found on Bank system‟s which the Bidder plans
to support or have access to include, but are not limited to: Information subject to special
statutory protection, legal actions, disciplinary actions, complaints, IT security, pending
cases, civil and criminal investigations, etc. The successful bidder shall exercise adequate
judgment to decide if particular information is sensitive and consult with the Bank in case of
doubts.
iv. The successful Bidder shall not publish or disclose in any manner, without the Bank‟s prior
written consent, the details of any security safeguards designed, developed, or implemented
by the Bidder or existing at any of the Bank location. The Bidder will have to develop
procedures and implementation plans to ensure that IT resources leaving the control of the
assigned user (such as being reassigned, removed for repair, replaced, or upgraded) are
cleared of all Bank data and sensitive application software.
Integrated Risk Management Department, The South Indian Bank Limited.
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F. Adherence to Standards
 The bidder should adhere to laws of land and rules, regulations and guidelines prescribed by
various regulatory, statutory and Government authorities in India. The Bank reserves the
right to conduct an audit/ongoing audit of the services provided by the bidder. The Bank
reserves the right to ascertain information from the Banks and other institutions to which the
bidders have rendered their services for execution of similar projects.
G. Security Configuration, Monitoring and Audit
i. The baseline security configuration of Operating System, Database, Web server and all other
applications should be done by the bidder, according to the industry best practices and the
Banks baseline Board approved documents.
ii. Compliance with security best practices may be monitored by periodic computer security
audits performed by or on behalf of the Bank. The periodicity of these audits will be decided
at the discretion of the Bank. Periodicity for Regulatory Audits would be required as per the
rules and guidelines laid down by the regulator or as required by the regulator. These audits
plan to include, but are not limited to, a review of: access and authorization procedures,
physical security controls, input/output controls, DB controls, backup and recovery
procedures, network security controls and program change controls.
iii. To the extent that the Bank deems it necessary to carry out a program of inspection and audit
to safeguard against threats and hazards to the confidentiality, integrity, and availability of
data, the Bidder shall afford the Bank‟s representatives access to the Bidder‟s facilities,
installations, technical resources, operations, documentation, records, databases and
personnel. The Bidder must provide the Bank access to various monitoring and performance
measurement systems (both manual and automated). The Bank has the right to get the
monitoring and performance Measurement systems (both manual and automated) audited
without prior approval / notice to the Bidder.
H. Considerations for Proposed Hardware & Software to support the EWIRM Solution
i. All software like RDBMS should be of the latest tested proven bug-free version and should
be compatible to exiting RDBMS.
ii. The Bidder should provide the data sheets for all the hardware proposed.
iii. Roadmap for the CPUs proposed for Database and Application servers should be well within
the time schedule for project implementation specified in this RFP.
iv. The proposed solution should facilitate application level encryption
v. Proposed solution shall be platform independent i.e. it should function both Intel based and
Risk based platform.
vi. The proposed solution should have full capability to support database to database replication
and storage to storage replication between DC and DR with a Recovery Point Objective
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(RPO) of 15 minutes and Recovery Time Objective (RTO) of 4 hours. The replication
between DC and DR should be possible in both directions.‟
vii. The bidder shall specify the suitable hardware and supporting software which shall deliver
the best throughput and performance considering the present volumes and the sizing
proposed should consider the probable increase in volumes for next 5 years. The necessary
information required by bidder to estimate sizing of the proposed may be obtained from the
bank (if required).
I. Performance Guidelines
The proposed solution should comply with the following guidelines on performance and
solution components in minimum.
i. Bidder should clearly specify the detailed configuration and specifications of the
applications and corresponding hardware required at various levels of performance and
supply a detailed Bill of Materials (BoM) with the part numbers for the hardware based on
the technical requirements. The bidder should separately list down the reasons for the
recommended hardware configurations and specifications. The performance evaluation has
to be done considering SIB volumes and expansion pattern.
ii. The bidder has to explain through proper calculations how the performance of the system
vis-à-vis business statistics, projected growth, redundancy, projected growth in functional
requirements, concurrent users, performance parameters expected on peak load, VaR or
other parameter calculations, transactions handled per second, quarter end and year end
activity etc. are ensured. The bidder should provide data on any other parameter which
would be required.
iii. Bidder to indicate the timing of the performance testing (before/after installation of
hardware). Bidder will do this at a mutually agreed location at his cost.
iv. Bidder should also provide data on the solution as how the individual components offered
under the solution (application and associated hardware) would be able to meet the current
volumes as well as the future scalability requirements.
v. The bidder should provide information on industry standard benchmarks for the system such
as TPC certified by Transaction Processing Council.
vi. The bidder has to furnish the details of the configuration of the servers, OS and databases
used in such benchmarking exercise for TPC etc. and relate the same to the server
configurations proposed for Bank‟s requirement.
vii. The bidder should also provide the benchmarks with Risk Management application software
preferably conducted with real time loads for similar requirement or as acceptance test with
credential and details of references involved in conducting such benchmarks.
viii. The Bidder has to relate the same to the model and configuration of the hardware proposed
for Bank‟s requirement.
ix. Besides the above, the bidder may furnish the details of any other benchmarks either
Industry standard such as “SPEC” ratings or for other Financial Institutions with due
relevance.
Integrated Risk Management Department, The South Indian Bank Limited.
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x. The bidder may also furnish certified performance details from past implementations of
similar nature.
xi. Bank may advise the bidder to conduct the benchmark when the systems are ready for
dispatch to Bank‟s site or after completion of installation and evaluation of performance. It
is for the bidder to establish that the sizing is proper for the requirement and to demonstrate
the performance to Bank‟s designated officials and project consultants.
xii. It will be the responsibility of the selected bidder to coordinate with the Bank for the
successful integration with Core Banking Solution (existing or higher versions) and EDW
(as and when operational). Role of the Bank is limited to facilitating coordination between
the bidder (System integrator) and the system integrator for the EDW, if any(as and when
operational)
J. Service Level Agreement (SLA)
 The bidder shall be bound by the Service Levels described in this document. Service Levels
will include Availability measurements and Performance parameters. Bank requires the
Bidder to provide reports for all availability and performance parameters a log of all issues
that have been raised and Closed/ Pending Closure by the Bidder. The frequency of these
reports would be Weekly, Monthly, Quarterly and Yearly as mutually agreed. Apart from
reports on each availability and performance measurement parameter mentioned below, the
reporting should also include the following:
 Utilization of CPU, RAM, Hard Disk, I/O (Peak and Average)
 Percentage of CPU utilized by the system and user activity.
 CPU utilization broken down by user CPU and system CPU.
 Percentage of physical memory utilized by system and user processes.
 Problem Trends
 Call Resolution Time
 Audits will normally be done on monthly/quarterly basis or as required by Bank and will be
performed by Bank or Bank appointed third party agencies.
 The bidder is bound to provide on-site support to meet the requirements specified in SLA. In
other words, if the services rendered by the system falls short of standards stipulated in SLA,
the bidder shall provide on-site assistance.
K. SLA for Hardware & Software
Availability Measurements
Availability
of
Business
Infrastructure (Core Application
Servers, Core Database Servers,
Storage, SAN Switch, Tape
Library, RDBMS and related
components etc.) in DC and DRC
Expected
Service Level
Base Amount on which
penalty will be calculated
Penalty*
99.5%
Value of the said
Business infrastructure for
DC or DRC, as the case
may be.
10%
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Availability
of
all
other
infrastructure, all other software
components and Test
and Development infrastructure
99.5%
Value of the relevant
Infrastructure
10%
 The term „business infrastructure‟ mentioned in this document shall include all capital costs
of hardware, associated software and RDBMS (at DC or DRC, as the case may be) delivered
as of the point of time when the penalty is levied. The cost of AMC/ ATS from the second
year onwards will not be treated as capital cost and therefore excluded. The business
infrastructure shall also exclude the capital cost of all components related exclusively to
other infrastructure and Test and Development infrastructure, for the purpose of penalty
calculation.
Type of
Infrastructure
Performance
Measurement
Expected
Service Level
System
Response
Time
End to End
response time
within the DC Time or
DR (from the CRMS,
MRMS, ORMS,
ALMS &
IRMSApplication to
the Database and
back) should be
< 0.5 milliseconds
99.5%
Disaster
Recovery
Site
Availability
Business operations to
resume from
Disaster Recovery
Site within 4 hours
of the Data Centre
failing and vice versa.
Data Point
Availability
Recovery Point
Objective (RPO) of15
minutes.
Base Amount on which
penalty will be calculated
The bidder is to
upgrade the Hardware along
with related software and
services without any
additional cost to the Bank,
if service level is not met.
Until Service level is met,
penalty will be charged on
the value of the business
infrastructure at DC
or DRC, as the case may be.
Penalty*
10%
100%
Penalty will be charged on
the value of the business
infrastructure at DC
or DRC, as the case may be.
10%
10%
100%
Penalty will be charged on
the value of the business
infrastructure at DC or
DRC, as the case may be.
* The amount indicated in this column represents the maximum penalty, which would be charged
in case of default. In the event of failure of maintaining the uptime SLA liquidated damages of
10,000/- per hour with a grace period of 120 minutes.
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L. Road Permit
 In case of receiving of hardware to the area where Road Permit is required for transportation
of goods, it is the responsibility of the bidder to arrange for the same in advance without any
extra cost to the Bank.
M. Time Schedule
 The following time schedules should be adhered to for completion of the activities from the
date of the Purchase Order:
 Business requirement study: 45 days
 Software Installation: 45 Days
 Interface development, integration, customization, UAT, Training and
operationalization: 120 days
 Please note that maximum expected time frame of the project to GO LIVE is 7
months from the date of issuing Purchase Order*. Accordingly vendors have to
deploy the resources. Post-implementation on-site support should be provided for 3
months from Go Live date.
*Appropriate decision of extending the implementation period will be taken by bank, if
required.
 All the proposals should be duly signed by authorized signatories and both the Envelopes
should be duly sealed and super-scribed at the top along-with bid submission covering letter
in the format shown in Annexure - 14.
N. Project Documentation and Manuals
 All works related to the assignment handled are to be well documented and will form the
part of deliverables. They should be delivered both in hard copy and soft copy at the end of
the each stage.
O. REPORTING PROGRESS
 The Bidder shall report progress of all the activities covered within the scope of work given
in this RFP. The monthly progress report shall be given free of cost about various aspect of
the works/Service(s) to The South Indian Bank Limited. The South Indian Bank Limited on
mutual agreement between both Parties may change the periodicity of such reports.
P. Warranty & Annual Maintenance
i.
ii.
The warranty period for the Hardware and Software shall be for 2 years and 3 years
respectively from the GO LIVE date of the Enterprise Wide Integrated Risk Management
system. The AMC period start after completion of warranty period.
AMC payment due shall be released yearly in advance against Financial Bank Guarantee for
the value of AMC amount or shall be released after completion of full year. This clause is
applicable only in respect of AMCs entered subsequent to the AMC period noted in the
Integrated Risk Management Department, The South Indian Bank Limited.
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iii.
iv.
v.
vi.
vii.
project duration.
During Warranty Period/ AMC, Bidder guarantees a minimum uptime of 99.5 % on monthly
basis for the entire turnkey solution provided. This will be subject to a ceiling of not more
than 120 minutes cumulative downtime. Successful Bidder is expected to submit a report
within a week after expiry of every calendar month in this regard. Delays, if any, on account
of procurement of spares will not be exempted while reckoning the uptime SLA.
During maintenance period also, the Bidder guarantees on monthly basis an uptime of 99.5%
of the entire solution provided. Accordingly it is expected that necessary redundancy is built
into the solution for all components whether software or hardware.
During the period of AMC, if the service provided by the Bidder is not satisfactory, the Bank
reserves the right to terminate the AMC contract and appoint any other agency at the risk and
cost of the Bidder.
The maximum response time for a maintenance complaint from the site of installation (i.e.
time required for Bidder‟s maintenance engineers to report to the installations after a request
call / fax /email is made or letter is written) shall not exceed One hour.
In the event of failure of maintaining the uptime SLA liquidated damages of 10,000/- per
hour with a grace period of 120 minutes. The liquidated damages mentioned under this clause
shall be independent of liquidated damages/penalty mentioned in clause XVII.G of this RFP
Q. Terms and Conditions during Warranty and AMC Period
 During the period of contract up to completion of Warranty and also during annual
maintenance, the selected bidder shall do the following:
a. Any software support like update/enhancement/software upgrade etc. released till the
completion of warranty and during annual maintenance shall be supplied, installed and
commissioned free of cost by the bidder. However, any such software support like update/
enhancement/upgrade shall be communicated to the Bank by the Bidder within a period of
one month from the date of release. The Bank reserves the right to procure the
update/enhancement/ System software upgrade.
b. If any software upgrades and updates are provided by the OEM as free of cost, it should be
provided and installed & configured by the selected bidder free of cost.
c. Any corruption in the Software or media shall be rectified during the full period of the
contract including Warranty and AMC, at no extra cost to the Bank.
d. The system services, as and when required, and complete maintenance of the software system
during warranty and AMC period shall be supported.
e. Service Support is defined specifically as helpdesk, update/enhancement, upgrade, technical
guidance, technical consultancy, enablement of features and functionality, problem solving
and troubleshooting, providing technical solution, rectification of bugs, enabling features of
the software already provided, providing additional user controlled reports, Changes in
configuration & settings, device configuration, enabling parameterized features, future
product information, migration, manpower resource allotment for pre-planned activity, coIntegrated Risk Management Department, The South Indian Bank Limited.
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f.
g.
h.
i.
j.
k.
l.
XV.
ordination for changes in structure, etc.
The support shall be given in person or through telephone, FAX, letter and E-mail within a
reasonable time as the case may be.
In future, if any configuration changes are required, it should be done by the bidder during
warranty and AMC period. However Bank will intimate the bidder well in advance for doing
such configuration changes. Configuration changes may be done either centrally or remotely
as decided by the bank when need arises. However if bidder‟s personnel is stationed at the
remote place the bidder should arrange the personnel to make such configuration change at
the respective location at bidders‟ own cost. However in case the bidder has any concerns, it
should be informed to the Bank in writing with reason for taking appropriate/ amicable/
mutually agreed decision in the matter.
The Bank reserves the right to modify/update the parameter files/configuration with required
awareness of its consequences and any such modification/ updation will be recorded for
information of the selected bidder without any impact on the media as per OEM descriptions.
Only licensed copies of software shall be supplied and ported. Further, all software supplied
shall be of latest tested proven version which is bug free. The Solution offered should have
all components which are bug free, no known vulnerabilities reported and of latest stable
version, which are having a 3 years clean track record.
The Bidder shall be bound to provide technical consultancy and guidance for successful
operation of the Risk Solutions and its expansion in future by the Bank during the warranty
and AMC period.
Preventive maintenance shall be compulsory during Warranty and AMC period. Preventive
maintenance activity should be completed every quarter and report should be submitted to the
Bank. Preventive maintenance activity should take care of physical verification, device
configuration verification, device health check up, cleaning of devices, fine-tuning the
configuration, security check up, verification of bugs/patches,etc. The preventive
maintenance report format shall be prepared by bidder in the format acceptable to Bank and
once confirmed, this format shall be strictly followed by the bidder and submit the same for
each location while claiming AMC payment.
The bidder shall provide centralized complaint booking facility to the Bank and the dash
board, if available, shall be provided to the Bank. The method of booking complaints shall be
through E-mail, Toll-free no, on line portal, web, etc.
TERMINATION
A. Termination For Default
 The Bank, without prejudice to any other remedy for breach of contract, by written notice of
default sent to the Successful Bidder, may terminate this Contract in whole or in part:
a. If the Successful Bidder fails to deliver any or all of the deliverables within the period(s)
specified in the Contract, or within any extension thereof granted by the Bank; or;
Integrated Risk Management Department, The South Indian Bank Limited.
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b. If the Successful Bidder fails to perform any other obligation(s) under the contract.
c. If the Successful Bidder, in the judgment of the Bank has engaged in corrupt or
fraudulent practices in competing for or in executing the Contract. Corrupt practice
means the offering, giving, receiving or soliciting of anything of value or influence the
action of a public official in the procurement process or in contract execution;
and“fraudulent practice” means a misrepresentation of facts in order to influence a
procurement process or the execution of a contract to the detriment of the Bank, and
includes collusive practice among Bidders (prior to or after bid submission) designed to
establish bid prices at artificial non-competitive levels and to deprive the Bank of the
benefits of free and open competition.
 In the event, the Bank terminates the Contract in whole or in part, the Bank may procure,
upon such terms and in such manner as it deems appropriate, Goods or Services similar to
those undelivered, and the Successful Bidder shall be liable to the Bank for any excess costs
for such similar Goods or Services. However, the Successful Bidder shall continue
performance of the Contract to the extent not terminated.
B. Termination for Insolvency
 If the Bidder becomes Bankrupt or insolvent, has a receiving order issued against it,
compounds with its creditors, or, if the Bidder is a corporation, a resolution is passed or order
is made for its winding up (other than a voluntary liquidation for the purposes of
amalgamation or reconstruction), a receiver is appointed over any part of its undertaking or
assets, or if the Bidder takes or suffers any other analogous action in consequence of debt;
then the Bank may, at any time, terminate the contract by giving written notice to the Bidder.
If the contract is terminated by the Bank in terms of this Clause, termination will be without
compensation to the Bidder, provided that such termination will not prejudice or affect any
right of action or remedy which has accrued or will accrue thereafter to the Bank. In case, the
termination occurs before implementation in all the locations in terms of this clause, the Bank
is entitled to make its claim to the extent of the amount already paid by the Bank to the
Bidder.
C. Termination for convenience
The Bank, by written notice sent to the Bidder, may terminate the Contract, in whole or in
part, at any time at its convenience. The notice of termination shall specify that termination is
for the Bank‟s convenience, the extent to which performance of work under the Contract is
terminated and the date upon which such termination becomes effective
Integrated Risk Management Department, The South Indian Bank Limited.
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D. Termination – Key Terms & Conditions
 The Bank shall be entitled to terminate the agreement with the Bidder at any time by giving
sixty (60) days prior written notice to the Bidder. The Bank shall be entitled to terminate the
agreement at any time by giving notice if the bidder:
a.
b.
c.
d.
e.
has a winding up order made against it; or
has a receiver appointed over all or substantial assets; or
is or becomes unable to pay its debts as they become due; or
enters into any arrangement or composition with or for the benefit of its creditors; or
Passes a resolution for its voluntary winding up or dissolution or if it is dissolved.
 The Bidder shall have right to terminate only in the event of winding up of the Bank.
E. Consequences of Termination
 In the event of termination of the Contract due to any cause whatsoever, [whether consequent
to the stipulated term of the Contract or otherwise], The Bank shall be entitled to impose any
such obligations and conditions and issue any clarifications as may be necessary to ensure an
efficient transition and effective business continuity of the Service(s) which the Bidder shall
be obliged to comply with and take all available steps to minimize loss resulting from that
termination/breach, and further allow the next successor Bidder to take over the obligations
of the erstwhile Bidder in relation to the execution/continued execution of the scope of the
Contract.
 In the event that the termination of the Contract is due to the expiry of the term of the
Contract, a decision not to grant any (further) extension by the Bank, the Bidder herein shall
be obliged to provide all such assistance to the next successor Bidder or any other person as
may be required and as the Bank may specify including training, where the successor(s) is a
representative/personnel of the Bank to enable the successor to adequately provide the
Service(s) hereunder, even where such assistance is required to be rendered for a reasonable
period that may extend beyond the term/earlier termination hereof.
 Nothing herein shall restrict the right of the Bank to invoke the Performance Bank Guarantee
and other guarantees, securities furnished and pursue such other rights and/or remedies that
may be available to the Bank under law or otherwise.
 The termination hereof shall not affect any accrued right or liability of either Party nor affect
the operation of the provisions of the Contract that are expressly or by implication intended to
come into or continue in force on or after such termination.
F. Exit Option
 The Bank reserves the right to cancel the contract in the event of happening one or more of
the following Conditions:
Integrated Risk Management Department, The South Indian Bank Limited.
Page 101
i. Failure of the successful Bidder to furnish the Performance Guarantee within 30 days
from the date of signing of the Contract by the Bank and the Bidder.
ii. Failure of the bidder to agree on the terms of the contract within 21 days from the date
of communication of award by the Bank and sharing of terms of contract by the Bank.
If the bidder does not meet these criteria, then the Bank may at its discretion declare the
next best bidder as the successful bidder.
iii. Failure of the successful Bidder to sign the contract within 7 days from the agreement
on the terms of the issue of Contract by the Bank
iv. Delay in completing installation / implementation and acceptance tests/ checks beyond
the specified periods;
v. Serious discrepancy in functionality to be provided or the performance levels agreed
upon, which have an impact on the functioning of the Bank.
 In addition to the cancellation of contract, Bank reserves the right to appropriate the damages
through encashment of Performance Guarantee given by the Bidder.
 The Bank and the Bidder shall together prepare the Reverse Transition Plan as part of Bidder
exit plan. However, the Bank shall have the sole discretion to ascertain whether such Plan has
been complied with.
 Notwithstanding the existence of a dispute, and/or the commencement of arbitration
Proceedings, the Bidder will be expected to continue the facilities management services. The
Bank shall have the sole and absolute discretion to decide whether proper reverse transition
mechanism over a period of 6 to 12 months, has been complied with.
 Reverse Transition mechanism would typically include service and tasks that are required to
be performed / rendered by the Bidder to the Bank or its designee to ensure smooth handover,
transitioning of application knowledge, Bank‟s deliverables, and maintenance and facility
management.
G. Termination of contract
 Apart from the general grounds of default mentioned above, the Bank reserves its right to
cancel the order in the event of, but not limited to, one or more of the following specific
situations:
a)
b)
c)
d)
e)
f)
g)
h)
Unnecessary or unwarranted delay in execution of the work allotted.
Delay in providing the requisite manpower at the Bank‟s site.
Delay in submission of reports beyond the stipulated periods.
Change in the composition of staff as furnished in the bid
Breach of trust is noticed during any stage of the consultancy assignment.
The selected bidder commits a breach of any of the terms and conditions of the bid.
The selected bidder goes in to liquidation voluntarily or otherwise.
If it is found at any stage that the bidder has concealed any important information or
has submitted any false information or declaration particularly regarding any pending
legal action or blacklisting status.
Integrated Risk Management Department, The South Indian Bank Limited.
Page 102
i) The Bank reserves the right to recover any dues payable by the selected bidder from
any amount outstanding to the credit of the selected bidder, including the pending bills
and security deposit, if any, under this contract or any other contract/order.
j) The decision of the Bank as to whether or not any one or more of the above situation
has(have) arisen shall be final and binding on the vendor
 In addition to the cancellation of order, The Bank reserves the right to appropriate the
damages from foreclosure of the Bank guarantee given by the bidder.
H. Termination of partner of Bidder
 In case service of the partner of successful bidder are terminated due to any reasons
whatsoever including but not limited to the reasons mentioned above, the bidder shall be
responsible for identifying an alternative partner to execute the tasks unfinished by the
terminated partner.
 The party identified by the successful bidder shall also comply with the eligibility criteria
listed out in this RFP.
I. Force Majeure
a. Notwithstanding the provisions of TCC (Terms & Conditions of the Contract), the Bidder
shall not be liable for forfeiture of its performance security, liquidated damages, or
termination for default if and to the extent that its delay in performance or other failure to
perform its obligations under the Contract is the result of an event of Force Majeure.
b. For purposes of this clause, “Force Majeure” means an event beyond the control of the
Bidder and not involving the Bidder‟s fault or negligence and not foreseeable. Such events
may include, but are not restricted to, Acts of God, wars or revolutions, fires, floods,
epidemics, quarantine restrictions, and freight embargoes.
c. If a Force Majeure situation arises, the Bidder shall promptly notify the Bank in writing of
such condition and the cause thereof. Unless otherwise directed by the Bank in writing, the
Bidder shall continue to perform its obligations under the Contract as far as is reasonably
practical, and shall seek all reasonable alternative means for performance not prevented by
the Force Majeure event.
J. Resolution of disputes:
 The Bank and the bidder shall make every effort to resolve amicably, by direct informal
negotiation, any disagreement or dispute arising between them under or in connection with
the contract. If after thirty days from the commencement of such informal negotiations, The
South Indian Bank Limited and the bidder are unable to resolve amicably a contract dispute;
either party may require that the dispute be referred for resolution by formal arbitration.
Integrated Risk Management Department, The South Indian Bank Limited.
Page 103
 All questions, disputes or differences arising under and out of, or in connection with the
contract, shall be referred to two Arbitrators: one Arbitrator to be nominated by the Bank
and the other to be nominated by the Bidder. In the case of the said Arbitrators not agreeing,
then the matter will be referred to an umpire to be appointed by the Arbitrators in writing
before proceeding with the reference. The award of the Arbitrators, and in the event of their
not agreeing, the award of the Umpire appointed by them shall be final and binding on the
parties. The Arbitration and Conciliation Act 1996 shall apply to the arbitration proceedings
and the venue & jurisdiction of the arbitration shall be Thrissur.
 The cost of arbitration (except the cost & fees of Advocates) shall be borne by each party in
equal proportion. The cost of the advocates shall be borne by respective party appointing the
Advocates.
XVI. ELIGIBILTY CRITERIA
 The Bank is looking to identify a Risk Solution Provider who has demonstrable technical
competency for implementing Basel-II/Basel-III norms, ALM and FTP in tune with
RBI/BCBS guidelines and International Best Practices. The Bidder should have capability to
review the existing risk management framework of the Bank (including the prevailing
policies, structures, processes, etc), design and implement Basel II compliant Risk
Management Systems and instituting ICAAP. The Bidder is expected to have adequate
experience in implementation of software products/ projects compliant with the integrated
risk management framework for Basel II and ICAAP, and also possess high quality/ process
accreditation(s). The Bidder should be well established and have sound financial standing.
Only those Bidders who fulfill the following criteria are eligible to respond to the RFP. Any
effort by Bidder to influence the Bank in the Bank‟s bid evaluation, bid comparison or
contract award decision may result in the rejection of the Bidders‟ bid. Bank‟s decision will
be final and without prejudice and will be binding on all Bidders.
 The bidders are required to meet the following eligibility criteria and provide adequate
documentary evidence for each of the criteria stipulated below. Only those bids satisfying all
the eligibility criteria would be further processed.
 Co-operative Banks (State Co-operative Banks, District Central cooperative Banks, Urban
Co-operative Banks, etc.) shall not be considered for evaluation.
Sl No
Eligibility criteria
Details of Proof
1
Should be a Government Organization/
PSU /PSE / registered partnership
firm/LLP/ a limited company under Indian
Laws / an autonomous Institution promoted
by RBI/GOI
Reference
of
Act/Notification,
Registration Certificate or any document
evidencing the formation of entity
2
Should have existence in India for three
years as on 31.03.2013. (In case of mergers
Letter of Commencement of Business in
case of Public Company, Registration in
Integrated Risk Management Department, The South Indian Bank Limited.
Page 104
Sl No
Eligibility criteria
Details of Proof
/ acquisitions / restructuring or name
change, the date of establishment of earlier /
original Partnership Firm / Limited
Company / Institution can be taken into
account).
case of others.
3
The Bidder should have average revenues
in excess of INR 10 Crore for the past three
financial years
Annual report, Balance Sheet / P&L
statement (Audited).
4
The Bidder should have demonstrated
Positive Net Worth, for the last three
financial years
Copy of audited balance sheets and
profit and loss statements for last three
financial years
5
The bidder and partner should have never
been blacklisted / barred / disqualified by
any regulator / statutory body.
Self Declaration subject to satisfaction
of South Indian Bank
6
The Bidder should own the intellectual
property rights of the product / solution ora.
should have rights from the owner. If not,
the Bidder should have in place proper tieups, commercial agreements, authorized
implementation partnership etc. for
deployment/ resale/ customization of
software with the product Bidder or any
other third party, whose software products
are offered
In case where bidder is a SI
A. Self-Declaration from the Bidder
stating that proper tie up/ agreement for
for deployment/ resale/ customization of
software has been entered with OEM
B. An authorization letter from
manufacturer (OEM) to this effect
should be furnished and it shall give
mandate to participate in this RFP.
C. Self declaration specifying that the
bidder would be solely responsible for
designing,
procuring,
delivering,
customising and implementing the entire
solution to the satisfaction of Bank.
In case where bidder is an OEM
A. Self declaration specifying that the
bidder would be solely responsible for
designing,
procuring,
delivering,
customising and implementing the entire
solution to the satisfaction of Bank.
B. The letter from the bidder specifying
that if any of its partners is not able to
meet its obligations as per contract
during contract period, the bidder will
meet the same to the satisfaction of
Bank.
Integrated Risk Management Department, The South Indian Bank Limited.
Page 105
Sl No
Eligibility criteria
Details of Proof
7
The bidder and partner should have
complete understanding of Basel II norms
of BCBS and Reserve Bank of India
Guidelines on Basel- II, Basel- III, Risk
Management Systems and best practices to
guide the Bank to move to advanced
approaches.
Self Declaration subject to satisfaction
of South Indian Bank
8
The bidder must be in the business of
providing solutions for Credit/ Operational/
Market Risk Management under BASEL II/
III guidelines, for scheduled commercial
Banks in India or abroad for last three
years.
An undertaking to this effect (specifying
the Banks serviced, along with Bank‟s
confirmation) must be submitted on
bidder's letter head.
9
The Bidder must have installed and
implemented/or is in the process of
implementation of a solution* compliant
with Basel II AIRB for credit risk at least
one Scheduled Commercial Bank in India
or abroad OR the AIRB compliant solution
(OEM/ product) must have been
implemented for Basel II credit risk at least
one Scheduled Commercial Bank/ Financial
Institution in India or abroad.
OR
The Bidder must have installed and
implemented/in
the
process
of
implementation of Basel II IMA solution*
for market risk for at least one Scheduled
Commercial Bank in India or abroad OR
the IMA compliant solution (OEM/
product) must have been implemented for
Basel II market risk in at least one
Scheduled Commercial Bank/ Financial
Institution in India or abroad.
OR
The Bidder must have installed and
implemented/
in
the
process
of
implementation Basel II AMA solution* for
operational risk for at least one Scheduled
Copies of the credential letter from the
Bank(s) to establish that the successful
bidder has implemented/in the process
of implementation of Basel II AIRB
solution for credit risk.
OR
Copies of the credential letter from the
Bank(s) to establish that the successful
bidder has implemented/in the process
of implementation of Basel II IMA
solution for market risk.
OR
Copies of the credential letter from the
Bank(s) to establish that the successful
bidder has implemented/in the process
of implementation of Basel II AMA
solution for operational risk.
Integrated Risk Management Department, The South Indian Bank Limited.
Page 106
Sl No
Eligibility criteria
Details of Proof
Commercial Bank/ Financial Institution in
India or abroad OR the AMA compliant
solution (OEM/ product) must have been
implemented for Basel II operational risk at
least one Scheduled Commercial Bank/
Financial Institution in India or abroad.
10
Disclosure of Conflict of Interest by bidder/
partner
Self-Declaration
*The solution in this context refers to solution which the bidder proposes to implement in
The South Indian Bank Limited.
XVII. SELECTION STRATEGY
 The objective of the evaluation process is to evaluate the bids to select an effective and best
fit solution at a competitive price. The evaluation will be undertaken by an Internal Selection
Committee formed by the Bank. The Bank may consider recommendations made by
External Experts/Consultants on the evaluation. The committee or authorised official shall
recommend the successful bidder to be engaged for this assignment before Board and the
decision of our Board shall be final, conclusive and binding on the bidders.
 Through this Request for Proposal, Bank aims to select a Bidder/ application provider who
would undertake the designing and implementation of the required solution. The Bidder
shall be entrusted with end to end responsibility for the execution of the project under the
scope of this RFP
 The Bank will scrutinize the offers to determine whether they are complete, whether any
errors have been made in the offer, whether required technical documentation has been
furnished, whether the documents have been properly signed, and whether items are quoted
as per the schedule. The Bank may, at its discretion, waive any minor non- conformity or
any minor deficiency in an offer. This shall be binding on all Bidders and the Bank reserves
the right for such waivers and the Bank‟s decision in the matter will be final.
 Bank may call for any clarifications/additional particulars required, if any, on the technical/
commercial bids submitted. The bidder has to submit the clarifications/ additional particulars
in writing within the specified date and time. The bidder‟s offer may be disqualified, if the
clarifications/ additional particulars sought are not submitted within the specified date and
time. Bank reserves the right to call for presentation/s, product walkthroughs, on the features
of the solution offered etc., from the bidders based on the technical bids submitted by them.
Bank also reserves the right to conduct Reference Site Visits at the bidder‟s client sites.
Based upon the final technical scoring, short listing would be made of the eligible bidders
for final commercial bidding.
Integrated Risk Management Department, The South Indian Bank Limited.
Page 107
.
NOTE: The Bank's decision in respect of eligibility criteria, evaluation methodology and
short listing of bidders will be final and no claims, whatsoever in this respect, shall be
entertained.
A. Evaluation of Technical Bid: The proposal submitted by the Bidders shall be evaluated on the following group of
parameters.





Functional Requirements (FR)
Technical Requirements (TR)
Product Demonstration and Bid Presentation (PB)
Approach and Methodology (AM)
Past Experience (PE)
 The marks are assigned for each individual parameter under these groups and marks scored
by each bidder under each parameter are aggregated to find out the total technical score of
the bidder.
 The score for evaluation of different risk management systems /different modules of
integrated risk management systems shall be decided by the Internal Selection Committee.
 The selection parameters are explained in following paragraphs.
a) Scoring Methodology
Requirements (TR)
for
Functional
Requirements
(FR)
and
Technical
 The expected functional capabilities and marks allocated for each capability for the CRMS
(Credit Risk Management System), MRMS (Market Risk Management System) and ORMS
(Operational Risk Management System) software, Asset Liability Management Systems
(ALMS), Pillar- II, Pillar-III and Integrated capital computation module are given in
previous sections. All the functional and technical requirements for achieving regulatory
compliance are mandatory. Bidder shall indicate against each requirement/capability the
availability.
 The means of indicating availability is given in the following table.
The type of
response/scale
S
A
C
U
Expansion/meaning
Standardized, this scale indicates that this feature is a
standard feature of the solution.
Alternative available
Customization required
Unavailable
 Any responses other than S/C/A/U are not acceptable and will be treated as U.
Integrated Risk Management Department, The South Indian Bank Limited.
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 While scoring, the scales namely S, A, C and U shall be assigned 100%, 75%, 50% and 0%
weight respectively. These percentages shall be applied on the maximum marks allocated
against each parameter to arrive at the score earned by the bidders under each parameter.
 The Software solution offered, however, should have at least 70% of the requirements as
standardized. The remaining shall be customized before the completion of pilot run at no
extra cost to the Bank. The bidder shall score at least 70% of the maximum score under
technical parameters.
b) Scoring Methodology for Product Demonstration & Bid Presentation (PB)
 Eligible Bidders will be required to make presentations to supplement their bids and show a
detailed product demonstration. The number of eligible bidders called for product
demonstration is purely a matter of discretion of the Bank. The Bank will schedule
presentations and the time and location will be communicated to the Bidders. Failure of a
Bidder to complete a scheduled presentation to the Bank may result in rejection of the
proposal.
 The marks assigned under this parameter shall be based on the effectiveness of the
demonstrations and presentations made by the bidder. The same criteria (as Evaluation for
functional specifications) will be applied to Product Demonstration also. However the marks
so scored shall be further multiplied with the proportion which number of requirements
against which S/A is indicated bears to total number of requirements.
c) Scoring Methodology for „Approach and Methodology (AM)‟
 The bidder is expected to provide, as a part of the technical bid, a detailed document that
explains the approach and methodology proposed by the bidder for the implementation of
the proposed solution. The “Approach and Methodology” adopted for the Implementation
would be evaluated by SIB and would at the minimum cover Reference site visit/Tele
Conference, Team Strength, Project Management and Training.
i.
Reference site visit/ Tele conference:
 A committee of officials from the Bank would carry out Reference Site Visits and/or
Telephonic interviews with the existing customers of the Bidder. The inputs that have been
received from the Customer would be considered by the Bank and this might not need any
documentary evidence. This rating would be purely on the inputs (like satisfaction of the
organization of the product, timeliness of implementation, promptness of support services
etc.) provided by the Bidder‟s customers and score would be assigned to Bidder as
mentioned in the Bank at its discretion may reject the proposal of the Bidder without giving
any reasons whatsoever, in case the responses received from the Site Visits are negative.
These inputs will be used to assign marks under the parameter „Past experience‟
Integrated Risk Management Department, The South Indian Bank Limited.
Page 109
ii.
Team Strength:
 Bidder responses to each point under Team Strength in Proposed Team Profile, including the
team profile provided by the Bidder, would be evaluated. The Bidder should ensure that the
people above the role of the Team Lead who are proposed for this project should have
worked on projects in Indian Banks earlier. The members of the proposed project team and
team lead should have a minimum experience of 2 years and 5 years respectively in
implementation of similar kind of projects in India /Abroad.
 In addition to the profile of his team members, the bidder is bound to furnish the profile of
team members of his partner. The format for furnishing the team profile is given in
Annexure-9. The marks assigned under this parameter are based on the qualifications and
experience of team members.
iii.
Project Management:
 Bidders are required to respond to each point under Project Management in Annexure-6.
Each question will be evaluated for suitability of response. The Bidder should provide
explanation on the Project Management process that is proposed for the Bank including
details of how the same was applied in a similar project.
iv.
Training:
 The Bidder will be responsible for training the Bank‟s employees in the areas of
implementation, operations, management, error handling, system administration, etc. with
respect to the implementation of CRMS/MRMS/ORMS/ALMS.
 The core team training will include functional as well as technical training and shall be
considered within the scope of the Bidder. The end user training should be also included in
the scope. The end user must be trained on all functionalities required for efficient daily
operations of the CRMS/MRMS/ORMS/ALMS.
 The quality of training programs already conducted by the Bidder shall form an integral part
of the final evaluation and selection of the Bidder. The detailed format for furnishing the
details of training is given in Annexure- 10.
 The marks assigned under this parameter are based on the number of trainings conducted by
the bidder in previous assignments, as indicated in Annexure-10. Each of the training
programmes listed out in the Annexure-10 shall be supported by documentary proof in the
customer- Bank‟s letter head.
d) Scoring Methodology for Past Experience (PE)
 The Bidder should provide details of past experience in implementing Market Risk
Management System (MRMS), Operational Risk Management System (ORMS), Credit Risk
Management System (CRMS) and Asset Liability Management System (ALMS).
Integrated Risk Management Department, The South Indian Bank Limited.
Page 110
 The Bidder‟s past experience shall be evaluated and the score obtained by the Bidder shall
be considered for evaluation as given in the Annexure-8 „Past Experience‟. The Bidder
should provide the details of all the implementations in Banks including details of Scope of
Project, Number of Branches with breakup of the role and Proof of implementation.
e) Disqualification Parameters in Technical Bid Evaluation
 The bidders who fail to score above or equal to 70% of the technical score shall be
disqualified. If only one bidder/none of the bidders qualify, Bank at its discretion may select
bidders with the top three technical scores for commercial evaluation.
 Bank at its discretion may reject the proposal of the Bidder without giving any reason
whatsoever, if in Bank‟s opinion, the Solution Sizing was not made appropriately to meet
the performance criteria as stipulated by Bank. Bank at its discretion may reject the proposal
of the Bidder without giving any reasons whatsoever, in case the responses received from
the Site Visits are negative.
f) Short Listing of Technically Qualified Bidders
 Technically qualified Bidders will be short listed based on the following criteria:
The technical score Tx = Score from Technical Evaluation for Credit Risk
+
Score from Technical Evaluation for Market Risk
+
Score from Technical Evaluation for Operational Risk
+
Score from Technical Evaluation for ALM/FTP
+
Score from Technical evaluation of Integrated Capital
Computation Module
 The Relative Technical Score (RTS) for the Bidders will be calculated based on the
following basis:
RTSx = Tx/ T-high *100
Where,
RTSx
:
Relative Technical Score of each Bidder
Tx
:
Technical Score of the current proposal
T-high
:
Technical Score of the Bidder with Highest Technical Score
(Up to 2 decimal values will be considered for the score)
Example: If Bidder A scores 1800 points and has the highest technical score, then T-high = 1800
If Bidder B scores 1700 points, then Bidder B is TB = 1700
Hence,
RTSA
=
1800/1800*100
=
100 %
RTSB
=
1700/1800*100
=
94.44 %
Integrated Risk Management Department, The South Indian Bank Limited.
Page 111
B. Evaluation of Commercial Bid: The bidder is expected to submit the Commercial bid in Indian Rupees inclusive of all the
applicable taxes. The commercial bid shall contain separate quotes for each of the
modules/systems namely credit, market and operational risks and ALM /FTP module.
 The Technically Qualified bidder with the lowest Commercial Bid after scrutiny and
normalization would be considered as C-LOW.
C. Techno-Commercial Scoring
 Computation Methodology for arriving at “Best Price”:- The techno-commercial score
shall be calculated as follows:
Total Score
=
(C-LOW / C) * Cweight + (T / T-HIGH) * Tweight
 Here C and T are the commercial and technical scores of the respective bidders. The scores
would be rounded-off to two decimal points.
 Cweight & Tweight shall be decided based on the discretion of the Internal Selection Committee.
 The Bank may at its sole discretion call the bidders who score highest combined score for
negotiation. The evaluation criteria mentioned in this RFP is tentative and the score earned
by the bidders in accordance with the evaluation parameters listed out above does not confer
them right to be called for negotiation. Further, the Bank has sole discretion in selection of
the successful bidder and decision of the Bank in this regard shall be final.
XVIII. AWARD OF CONTRACT
A. Notification of Acceptance of Bid
 Before the expiry of the period of validity of the proposal, The South Indian Bank Limited
shall notify the successful bidder in writing by registered letter or by fax or by hand-delivery
or by email, that its bid has been selected. The bidder shall acknowledge in writing receipt of
the notification of selection and has to convey his absolute, unconditional and unqualified
acceptance and thereafter enter into agreement / Contract within 15 days from the date on
which selection is notified to bidder. The proposed format of notification of acceptance is
given in Annexure-15.
B. Project management:
 The bidder will nominate a Project Manager immediately on acceptance of the order, who
will be the single point of contact for the project. The responsibilities and experience of
project manager is detailed under “Responsibilities of bidder” in Section III.B of this RFP.
 The selected bidder cannot change the Project Manager or any other members of the team/s
during the entire period of execution of the implementation project unless consented in
Integrated Risk Management Department, The South Indian Bank Limited.
Page 112
writing by the Bank. In the eventuality of any such change the personnel brought in should
have equivalent or more exposure and qualifications compared to the personnel replaced and
it should be with the Bank‟s concurrence.
 The selected bidder shall ensure that personnel deployed are competent, do not violate any
of the contractual obligations under this contract and while on the premises of the Bank
conduct them in a dignified manner & shall not behave in any objectionable manner
C. Signing of contract
 Acceptance of selection shall be followed by signing of the Contract. However selection
committee may negotiate certain terms & conditions with successful bidder and obtain
necessary approvals from higher authorities, before signing of the Contract. The Bidders
should sign the Contract Form. A specimen of contract proposed to be executed with the
successful bidder is given in Annexure -16. Besides, the successful bidder should also sign a
non-disclosure agreement in the format specified in Annexure-3. The signing of Contract
will amount to award of contract and Bidder will initiate the execution of the work as
specified in the Contract. The signing of contract shall be completed within 30 days of
receipt of notification of the acceptance of bid. Annexure 3 and Annexure 16 may be
modified if deemed fit by the Bank.
 The contract is signed for the entire duration of the project. Successful bidder shall
indemnify, protect and save the Bank against all claims, losses, costs, damages, expenses,
action, suits and other proceedings, resulting from infringement of any patent, trademarks,
copyrights etc or such other statutory infringements under the Copy Rights Act, 1957 or IT
Act 2008 or any Act in force at that time in respect of all the hardware, software and
network equipments or other systems supplied by bidder to the Bank from whatsoever
source.
D. Conditions precedent to contract
 The Contract is subject to the fulfillment of the following conditions : Obtaining of all statutory, regulatory and other permissions, approvals, consents and noobjections required under applicable laws or RBI for the performance of the service(s)
under and in accordance with the Contract.
 Furnishing of such other documents as The South Indian Bank Limited may specify
E. Performance Bank Guarantee
 The successful bidder shall submit a Performance Guarantee issued by a Scheduled
Commercial Bank in favour of The South Indian Bank Limited as per the format given in
Annexure -17 for 10 % value of the contract in Indian Rupees along with the letter of
acceptance of the assignment.
 The Bidder shall furnish to the Bank, the Performance Guarantee within 30 days from the
date of signing of contract. The Performance Guarantee should be valid for the entire project
Integrated Risk Management Department, The South Indian Bank Limited.
Page 113






period or entire period of 8 years, whichever is longer. Project period includes
Implementation period (1 year), Warranty period (2 years), AMC period and any further
period remaining till the date of receipt of approval from RBI in respect of IRB, AMA and
IMA.
The proceeds of the performance Guarantee shall be payable to the Bank as compensation
for any loss resulting from the Bidder‟s failure to complete its obligations under the
Contract. The Performance Guarantee shall be denominated in Indian Rupees and shall be
by way of Bank Guarantee issued by a Private Sector/ Public Sector Banks in India (other
than The South Indian Bank), acceptable to the Bank.
The Bank guarantee will be returned to the selected bidder after the selected bidder‟s
performance obligations under the agreement are completed and accepted by the Bank.
The selected bidder shall be responsible for extending the validity date of the Bank
guarantees as and when it is due, on account of incompletion of the project.
The Bank shall invoke the Bank guarantee before the expiry of validity, if work is not
completed / the guarantee is not extended before the due date as the case may be, or if the
selected bidder fails to complete his obligations under the contract or if there is undue delay
in implementation of the project and achieving the respective milestones, or the bidder
becomes insolvent or goes into liquidation voluntarily or otherwise.
The Bank shall notify the selected bidder in writing before invoking the Bank guarantee. The
proceeds of the guarantee shall be payable to the Bank for any loss arising from the selected
Bidder‟s failure to complete his obligations under the contract.
In the event of any contract amendment, the Bidder shall, within 15 days after receipt of
such amendment, furnish the amendment to the performance guarantee, rendering the same
valid for the duration of the contract as amended.
F. Time period for completion of assignment
 The contract will be for a period comprising of Implementation period (1 year), Warranty
period (2 years), AMC period and any further period remaining till the date of receipt of
approval from RBI in respect of IRB, AMA and IMA. It is further stipulated that the
contract period shall not end before the implementation of ALM/FTP system to the
satisfaction of Bank.
 The bidder should also assist the Bank in finalization of the application for filing with the
regulator and responding to RBI queries and comments on the application for migration to
advanced approaches and making suitable changes to the Basel II implementation (if
necessary).
 The Bank, at its option may extend the timeframe, depending on its requirements. Any new
guidelines given by RBI and Basel with regard to advanced approaches will automatically
form part of the contract
 The successful bidder shall complete the project / perform and render the Services within the
agreed time frame starting from the date of award of Contract/Agreement.
Integrated Risk Management Department, The South Indian Bank Limited.
Page 114
G. Delay in adhering to the project timelines/Liquidated damages
 The Successful Bidder must strictly adhere to the time schedule, as specified in the Contract,
executed between the Bank and the bidder, pursuant hereto, for performance of the
obligations arising out of the contract and any delay will enable the Bank to resort to any or
all of the following at sole discretion of the Bank.
(a) Penalty;
(b) Termination of the agreement fully or partly
 If there is any delay in the implementation of the project due to bidder /partner‟s fault in
complying with time schedule furnished by the bidder and accepted by the Bank, it will
charge 1% on the total project implementation cost to the bidder for each week of delay as
penalty. Project Implementation cost in this context refers to total expenditure expected to be
incurred by the bank for procurement, design and implementation of software solutions
required to lay down Enterprise-wide Integrated Risk Management Architecture in
accordance with the International Best Practices and Guidelines of RBI/BCBS on Basel II,
Basel- III, ALM and FTP. The cost does not include Cost of Hardware procured for the
implementation. This penalty will be subject to an upper limit of 10% on the total project
implementation cost. Thereafter the order/contract may be cancelled and amount paid if any,
may be recovered with 1.25% interest per month. Any deviations from the norms would be
treated as breach of the contract by the bidder and will be dealt with accordingly. The delay
will be measured with reference to time schedule to be specified in the contract to be entered
with the successful bidder.
 The Bank also reserves its right to claim damages for improper or incomplete execution of
the assignment.
H. Use of Contract Documents & Information
 The successful bidder shall treat all documents, information, data and communication of and
with The South Indian Bank Limited as privileged and confidential and shall be bound by the
terms and conditions of the Non-Disclosure Agreement. The Bidder/implementation partner
shall execute the Non-Disclosure Agreement simultaneously at the time of execution of the
Contract.
 The successful bidder shall not, without The South Indian Bank Limited‟s prior written
consent, disclose the Contract, or any provision thereof, or any specification, plan, sample or
information or data or drawings / designs furnished by or on behalf of The South Indian Bank
Limited in connection therewith, to any person other than a person employed by the Bidder in
the performance of the Contract.
 Any document in any form it has been obtained, other than the Contract itself, enumerated in
this Bid Documents shall remain the property of The South Indian Bank Limited and shall
not be returned.
Integrated Risk Management Department, The South Indian Bank Limited.
Page 115
I. „NO CLAIM‟ Certificate
 The bidder shall not be entitled to make any claim, whatsoever, against The South Indian
Bank Limited, under or by virtue of or arising out of, the Contract/Agreement, nor shall The
South Indian Bank Limited entertain or consider any such claim, if made by the Bidder after
he has signed a „No Claim‟ Certificate in favour of The South Indian Bank Limited in such
forms as shall be required by The South Indian Bank Limited after the implementation of risk
management software solution is completed to the satisfaction of the Bank.
J. PUBLICITY
 Any publicity by the bidder in which the name of the Bank is to be used should be done only
with the explicit written permission of the Bank.
K. Payment Terms:
 The payment shall be released in accordance with table given below
Project Milestones
Successful completion of
current state assessment, gap
identification and resolution,
and systems requirement
specifications (SRS) sign off
Documentation of functional
capabilities of the software
and
training
reference
materials
Successful completion of
parameterization,
configuration
and
customization of software.
Application
Programming
Interface (API) development
Data Migration and Report
Generation
Credit Risk
Management
System
(CRMS)
Market Risk
Management
System
(MRMS)
Operational
Risk
Management
System
(ORMS)
Asset
Liability
Management
(ALM) &
Fund
Transfer
Pricing
(FTP)
System
1.00%
1.00%
1.00%
1.00%
1.50%
1.50%
1.50%
1.50%
7.50%
7.50%
7.50%
7.50%
5.00%
5.00%
5.00%
5.00%
5.00%
5.00%
5.00%
5.00%
Integrated Risk Management Department, The South Indian Bank Limited.
Page 116
Training to all users (end
users and core users) &
Complete
Documentation(including
user manuals)
Final UAT sign off and ‟GO
LIVE ‟
On completion of 1 year of
live implementation of the
corresponding module under
EWIRM solution
On completion of 2 years of
live implementation of the
corresponding module under
EWIRM solution
Retention Money will be
released one year after
successful approval by RBI
under Basel II
Total
10.00%
10.00%
10.00%
10.00%
20.00%
20.00%
20.00%
20.00%
20.00%
20.00%
20.00%
20.00%
10.00%
10.00%
10.00%
10.00%
20.00%
20.00%
20.00%
20.00%
100.00%
100.00%
100.00%
100.00%
Notes
1. The amount of payment released is determined by applying % referred above on the actual cost
/ proportionate cost quoted by the bidder. In case, if Bank chooses to purchase stand alone
systems for each risks and ALM / FTP, the % given above shall be applied on actual cost. In
other cases, proportionate cost for each module is worked out by multiplying the total price
quoted by the bidder in respect of integrated system with the proportion which price quoted in
respect of each individual system bears to the total price quoted.
2. The amount of payment kept aside for the stage titled „Application Programming Interface
(API) development‟ shall be released only when the implemented solution
performs/demonstrates the functional capabilities listed out under the head „Functional
requirements in respect of Pillar- II, Pillar- III and Basel III and integrated capital
computation module‟.
L. TAXES AND DUTIES:
 The Successful Bidder will be entirely responsible to pay all taxes whatsoever in connection
with delivery of the services at the sites including incidental services and commissioning.
 Wherever the laws and regulations require deduction of such taxes at the source of payment,
Bank shall effect such deductions from the payment due to the Bidder. The remittance of
amount so deducted and issue of certificate for such deductions shall be made by Bank as per
the laws and regulations in force.
 Nothing in the contract shall relieve the Bidder from his responsibility to pay any tax that
may be levied in India/abroad on income and profits made by the Bidder in respect of this
Integrated Risk Management Department, The South Indian Bank Limited.
Page 117
contract.
M. GENERAL TERMS AND CONDITIONS
 Bidder should compulsorily respond to any clarification (technical, functional, commercial)
letter/E-mail sent by the Bank.
 The South Indian Bank Limited reserves the right to open the quotations soon after their
receipt from all the Bidders without waiting till the last date specified.
 Continuity of project team members to be ensured during the period of project.
 Presence of any incomplete or ambiguous terms/ conditions/ quotes will disqualify the offer.
 The South Indian Bank Limited is not responsible for non-receipt of quotations within the
specified date and time due to any reason including postal holidays, or other types of delays.
 The South Indian Bank Limited is not bound to place the order from the lowest price bidder
or the most competent bidder.
 The bidder shall share its technology strategies and research & development efforts,
conducted in the course of this assignment with The South Indian Bank Limited.
 All inquiries, communications and requests for clarification shall be submitted in Hard
copies/e-mail to The South Indian Bank Limited and response for the same shall be obtained
in writing. Only such documents shall be considered as authoritative.
 The bidders should ensure that all points in the RFP document are taken into account before
submitting the Bid Documents.
 The bidder should have implemented similar assignment and necessary verifiable references
in this effect should be submitted with the proposal.
 Bidders are bound to make full disclosure of information required to judge them on the basis
of selection criteria specified in Section XVII.
N. LITIGATION
 If it comes to the notice of the Bank that the bidder has suppressed any information either
intentionally or otherwise, or furnished misleading or inaccurate information, the Bank
reserves the right to disqualify the bidder. If such information comes to the knowledge of the
Bank after the award of work, The South Indian Bank limited reserves the right to terminate
the Contract unilaterally at the total cost and risk of the bidder. The Bank also reserves the
right to recover any dues payable by the selected bidder from any amount outstanding to his
credit, including the pending bills etc., if any. The Bank will also reserve the right to recover
any Advance paid.
 Governing Law: - The Contract/Agreement shall be governed in accordance with the laws of
Republic of India. These provisions shall survive the Contract/Agreement.
 Jurisdiction of Courts:-The courts of India at Thrissur have exclusive jurisdiction to
determine any proceeding in relation to the Contract/Agreement. These provisions shall
survive the Contract/Agreement.
 Work under the Contract shall be continued by the selected bidder during the arbitration
Integrated Risk Management Department, The South Indian Bank Limited.
Page 118
proceedings unless otherwise directed in writing by the Bank unless the matter is such that
the works cannot possibly be continued until the decision of the arbitrator or of the umpire, as
the case may be, is obtained. Except as those which are otherwise explicitly provided in the
Contract/this document, no payment due or payable by the Bank, to the Bidder shall be
withheld on account of the ongoing arbitration proceedings, if any, unless it is the subject
matter or one of the subject matter thereof. The venue of the arbitration shall be at Thrissur,
Kerala State, India.
O. INFORMATION SECURITY
a. The Bidder and its personnel shall not carry any written material, layout, diagrams, floppy
diskettes, hard disk, storage tapes or any other media out of The South Indian Bank Limited‟
s premises without written permission from The South Indian Bank Limited.
b. The Bidder shall acknowledge that The South Indian Bank Limited‟s business data and
other proprietary information or materials, whether developed by The South Indian Bank
Limited or being used by The South Indian Bank Limited pursuant to a license agreement
with a third party (the foregoing collectively referred to herein as “proprietary information”)
are confidential and proprietary to The South Indian Bank Limited; and the Bidder shall
agrees to use reasonable care to safeguard the proprietary information and to prevent the
unauthorized use or disclosure thereof. The caution exercised by the bidder shall not be less
than that used by it to protect its own proprietary information. The Bidder recognizes that
the goodwill of The South Indian Bank Limited depends, among other things, upon Bidder
keeping such proprietary information confidential and that unauthorized disclosure of the
same by Bidder could damage The South Indian Bank Limited. Bidder shall use such
information only for the purpose of rendering the Service(s) to The South Indian Bank
Limited.
c. The Bidder‟s personnel shall follow The South Indian Bank Limited‟s Information System
security policy and instructions in this behalf.
d. The Bidder shall, upon termination of the Contract/Agreement for any reason, or upon
demand by The South Indian Bank Limited, whichever is earliest, return any and all
information provided to Bidder by The South Indian Bank Limited, including any copies or
reproductions, both hardcopy and electronic.
Integrated Risk Management Department, The South Indian Bank Limited.
Page 119
Annexure-1
Check List for Submission of Bid Documents
Check List
Sl No:
Description
Annexure No.
1.
Authorization Letter Format
2
2.
Non-Disclosure Agreement Form
3
3.
Check list for submission of eligibility criteria
4
4.
Profile of bidder/Partner
5
5.
Implementation methodology
6
6.
Reference site details
7
7.
Past Experience
8
8.
Team Profile
9
9.
Training
10
10.
Cover Letter for Commercial Bid
11
11.
The format for furnishing the price of software and hardware
12
12.
Table for Arriving at the Total Ownership Cost
13
13.
Bid submission covering letter
14
14.
Notification of Acceptance
15
15.
Specimen contract form
16
16.
Performance Bank Guarantee Format
17
Integrated Risk Management Department, The South Indian Bank Limited.
Page 120
Annexure-2
Authorization Letter Format
(On organization‟s letter head)
Place:
Date:
To
The Chief General Manager (IRMD)
The South Indian Bank Ltd
Integrated Risk Management Department,
SIB House, Head Office,
2nd Floor, Mission Quarters
Thrissur, Kerala,
Dear Sir,
SUB: Authorization Letter for attending the Pre-bid negotiations.
REF: YOUR RFP NO: - IRMD/ RFP /001/2014 Dt 08.03.2014
This has reference to our above RFP for implementation of Enterprise-wide Integrated Risk
Management Architecture in accordance with the International Best Practices and Guidelines of
RBI/BCBS
on
Basel-II,
Basel-III,
ALM
and
FTP.
Mr. / Ms. ________________________________________ is hereby authorized to attend the
Pre-bid negotiations & to discuss with you on the subject RFP _____________ on
_____________ on behalf of our organization.
The specimen signature is attested below:______________________________
Specimen Signature of Mr. /Ms.
___________________________
Signature of Authorizing Authority
__________________________
Name and designation of Authorizing Authority
____________________________
Attested
Photograph
of the Authorized
Representative
Name and designation of Attesting Authority
Integrated Risk Management Department, The South Indian Bank Limited.
Page 121
Annexure-3
Non-Disclosure Agreement Form
This Non-Disclosure Agreement made and entered into at …………………. this…….day of
……………….. 2014
BY AND BETWEEN
………………………………… Company Limited, a company incorporated under the
Companies Act, 1956 having its registered office at ….………. (hereinafter referred to as the
Implementation partner, which expression unless repugnant to the context or meaning thereof be
deemed to include its permitted successors) of the ONE PART;
AND
The South Indian Bank Limited, a company registered under the Companies Act, 1956 and a
Banking company within the meaning of the Banking Regulation Act, 1949 having its registered
office at SIB House, Mission Quarters, Thrissur, Kerala -680001 (hereinafter referred to as “The
South Indian Bank Limited” which expression shall unless repugnant to the context or meaning
thereof be deemed to include its successors and assigns) of the OTHER PART.
The Implementation partner and the South Indian Bank Limited are hereinafter collectively
referred to as “the Parties “and individually as “the Party”
WHEREAS:
1. The South Indian Bank Limited is engaged in Banking business and intends to appoint an
implementation partner for implementation of Enterprise-wide Integrated Risk Management
Architecture in accordance with the International Best Practices and Guidelines of
RBI/BCBS on Basel II, Basel- III, ALM and FTP the scope of which is specified in IRMD/
RFP /001/2014 Dt 08.03.2014. In the course of such assignment, it is anticipated that The
South Indian Bank Limited or any of its officers, employees, officials, representatives or
agents may disclose, or deliver, to the Implementation partner some Confidential
Information (as hereinafter defined), to enable the Implementation partner to carry out the
aforesaid exercise (hereinafter referred to as " the Purpose").
2. The Implementation partner is aware and confirms that the information, data and other
documents made available in the Agreement /Contract and thereafter regarding the services
delivered in this RFP or otherwise shall remain confidential.
3. The Implementation partner is aware that all the confidential information under the Bid
documents or those shared under the terms if this Agreement or Contract is privileged and
strictly confidential and/ or proprietary to The South Indian Bank Limited.
Integrated Risk Management Department, The South Indian Bank Limited.
Page 122
NOW, THEREFORE THIS AGREEMENT WITNESSETH THAT in consideration of the above
premises and the The South Indian Bank Limited granting the Implementation partner and or his
agents, representatives to have specific access to The South Indian Bank Limited property /
information and other data it is hereby agreed by and between the parties hereto as follows:
1. Confidential Information:
(i)“Confidential Information” means all information disclosed/furnished by The South Indian
Bank Limited or any such information which comes into the knowledge of the Implementation
partner during the course of engagement, whether orally, in writing or in electronic, magnetic or
other form for the limited purpose of enabling the Implementation partner to carry out the
assignment, and shall mean and include data, documents and information or any copy, abstract,
extract, sample, note or module thereof, explicitly designated as "Confidential"; Provided the
oral information is set forth in writing and marked “Confidential" within fifteen (15) days of
such oral disclosure.
(ii) Information such as (i) intellectual property information; (ii) technical or business
information or material not covered in (i); (iii) proprietary or internal information relating to the
current, future and proposed products or services of The South Indian Bank Limited including,
financial information, process/flow charts, business models, designs, drawings, data information
related to products and services, procurement requirements, purchasing, customers, investors,
employees, business and contractual relationships, business forecasts, business plans and
strategies, information the Parties provide regarding third parties; (iv) information disclosed
pursuant to this agreement including but not limited to Information Security policy and
procedures, internal policies and plans and Organization charts etc; and (v) all such other
information which by its nature or the circumstances of its disclosure is confidential
(iii) “Intellectual Property Rights” means any patent, copyright, trademark, trade name, design,
trade secret, permit, service marks, brands, propriety information, knowledge, technology,
licenses, databases, computer programs, software, know-how or other form of intellectual
property right, title, benefits or interest whether arising before or after the execution of this
Contract and the right to ownership and registration of these rights.
iv) The Implementation partner may use the Confidential Information solely for and in
connection with the Purpose and shall not use the Confidential Information or any part thereof
for any reason other than the Purpose stated above.
Confidential Information in oral form must be identified as confidential at the time of disclosure
and confirmed as such in writing within fifteen days of such disclosure.
Confidential Information does not include information which:
(a) Is or subsequently becomes legally and publicly available without breach of this Agreement.
Integrated Risk Management Department, The South Indian Bank Limited.
Page 123
(b) was rightfully in the possession of the Implementation partner without any obligation of
confidentiality prior to receiving it from The South Indian Bank Limited, or prior to entering into
this agreement, the recipient shall have the burden of proving the source of information herein
above mentioned and are applicable to the information in the possession of the recipient.
(c) was rightfully obtained by the Implementation partner from a source other than The South
Indian Bank Limited without any obligation of confidentiality,
(d) was developed by for the Implementation partner independently and without reference to any
Confidential Information and such independent development can be shown by documentary
evidence.
(e) the recipient knew or had in its possession, prior to disclosure, without limitation on its
confidentiality;
(f) is released from confidentiality with the prior written consent of the other party.
The recipient shall have the burden of proving hereinabove are applicable to the information in
the possession of the recipient.
Confidential Information shall at all times remain the sole and exclusive property of The South
Indian Bank Limited. Upon termination of this Agreement, Confidential information shall be
returned to The South Indian Bank Limited or destroyed at its directions. The destruction of
information if any, shall be witnessed and so recorded, in writing, by an authorised
representative of each of the Parties. Nothing contained herein shall in any manner impair or
affect rights of The South Indian Bank Limited in respect of the Confidential Information.
In the event Implementation partner is legally compelled to disclose any Confidential
Information, Implementation partner shall give sufficient notice to The South Indian Bank
Limited to prevent or minimize to the extent possible, such disclosure. Implementation partner
shall disclose to third party i.e. any Confidential Information or the contents of this Agreement
without the prior written consent of The South Indian Bank Limited. The obligations of this
Clause shall be satisfied by handling Confidential Information with the same degree of care,
which the Implementation partner will apply to its own similar confidential information but in no
event less than reasonable care. The obligations of this clause shall survive the expiration,
cancellation or termination of this Agreement.
2. Non-disclosure:
The Implementation partner shall not commercially use or disclose any Confidential Information
or any materials derived there from to any other person or entity other than persons in the direct
employment of the Implementation partner who have a need to have access to and knowledge of
the Confidential Information solely for the Purpose authorized above. The Implementation
Integrated Risk Management Department, The South Indian Bank Limited.
Page 124
partner shall take appropriate measures by instruction and written agreement prior to disclosure
to such employees to prevent unauthorized use or disclosure. The Implementation partner agrees
to notify The South Indian Bank Limited immediately if it learns of any use or disclosure of the
Confidential Information in violation of terms of this Agreement.
Notwithstanding the marking and identification requirements above, the following categories of
information shall be treated as Confidential Information under this Agreement irrespective of
whether it is marked or identified as confidential:
a) Information regarding „The South Indian Bank Limited‟ and any of its Affiliates, customers
and their accounts (“Customer Information”). For purposes of this Agreement, Affiliate means a
business entity now or hereafter controlled by, controlling or under common control. Control
exists when an entity owns or controls more than 50% of the outstanding shares or securities
representing the right to vote for the election of directors or other managing authority of another
entity; or
b) any aspect of The South Indian Bank Limited's business that is protected by patent,
copyright, trademark, trade secret or other similar intellectual property right; or
c) Business processes and procedures; or
d) Current and future business plans; or
e) Personnel information; or
f) Financial information.
g) Capital adequacy computation workings
3. Publications:
The Implementation partner shall not make news releases, public announcements, give
interviews, issue or publish advertisements or publicize in any other manner whatsoever in
connection with this Agreement, the contents / provisions thereof, other information relating to
this Agreement, including references whether through media, social network or otherwise, the
Purpose, the Confidential Information or other matter of this Agreement, without the prior
written approval of The South Indian Bank Limited.
4. Term:
This Agreement shall be effective from the date hereof and shall continue till expiration of the
Purpose or termination of this Agreement by The South Indian Bank Limited, whichever is
earlier. The Implementation partner hereby agrees and undertakes to The South Indian Bank
Limited that immediately on termination of this Agreement it would forthwith cease using the
Integrated Risk Management Department, The South Indian Bank Limited.
Page 125
Confidential Information and further as directed The South Indian Bank Limited promptly return
or destroy, under information to The South Indian Bank Limited, all information received by it
from The South Indian Bank Limited for the Purpose, whether marked Confidential or otherwise,
and whether in written, graphic or other tangible form and all copies, abstracts, extracts, samples,
notes or modules thereof. The Implementation partner further agrees and undertake to The South
Indian Bank Limited to certify in writing to The South Indian Bank Limited that the obligations
set forth in this Agreement have been fully complied with.
Obligation of confidentiality contemplated under this Agreement shall continue to be binding
and applicable without limit in point in time. The Implementation partner agrees and undertake
to treat Confidential Information as confidential for a period of [five (5)] years from the date of
receipt and in the event of earlier termination of the Contract/Agreement, the Parties hereby
agree to maintain the confidentiality of the Confidential Information for a further period of [two
(2)] years from the date of such early termination.
5. Title and Proprietary Rights:
Notwithstanding the disclosure of any Confidential Information by The South Indian Bank
Limited to the Implementation partner, the title and all intellectual property and proprietary
rights in the Confidential Information shall remain with The South Indian Bank Limited.
6. Remedies:
The Implementation partner acknowledges the confidential nature of Confidential Information
and breach of any provision of this Agreement by the Implementation Partner will result in
irreparable damage to The South Indian Bank Limited for which monetary compensation may
not be adequate and agrees that, if it or any of its directors, officers or employees should engage
or cause or permit any other person to engage in any act in violation of any provision hereof. The
South Indian Bank Limited shall be entitled, in addition to other remedies for damages & relief
as may be available to it, to an injunction or similar relief prohibiting the Implementation
partner, its directors, officers etc. from engaging in any such act which constitutes or results in
breach of any of the covenants of this Agreement. Any claim for relief to The South Indian Bank
Limited shall include The South Indian Bank Limited‟s costs and expenses of enforcement
(including the attorney's fees).
7. Governing Law:
The provisions of this Agreement shall be governed by the laws of India and the competent court
at Thrissur shall have exclusive jurisdiction in relation thereto even though other Courts in India
may also have similar jurisdictions.
8. Indemnity:
The Implementation partner shall defend, indemnify and hold harmless The South Indian Bank
Integrated Risk Management Department, The South Indian Bank Limited.
Page 126
Limited, its affiliates, subsidiaries, successors, assignees, and their respective officers, directors
and employees, at all times, from and against any and all claims, demands, damages, assertions
of liability whether civil, criminal, tortuous or of any nature whatsoever, arising out of or
pertaining to or resulting from any breach of representations and warranties made by the
Implementation partner. and/or breach of any provisions of this Agreement, including but not
limited to any claim from third party pursuant to any act or omission of the Implementation
partner, in the course of discharge of its obligations under this Agreement.
9. General:
The South Indian Bank Limited discloses the Confidential Information without any
representation or warranty, whether express, implied or otherwise, on truthfulness, accuracy,
completeness, lawfulness, and merchantability, fitness for a particular purpose, title, noninfringement, or anything else.
In witness whereof, the Parties hereto have executed these presents the day, month and year first
herein above written.
For and on behalf of -------------------------- Ltd.
(Designation)
For and on behalf of The South Indian Bank Limited
(Designation)
Integrated Risk Management Department, The South Indian Bank Limited.
Page 127
Annexure-4
Check list for submission of eligibility criteria
Sl. No.
Eligibility Criteria
Compliance
(Yes/ No)
Proofs to be enclosed
1.
2.
3.
4.
Integrated Risk Management Department, The South Indian Bank Limited.
Page 128
Annexure-5
Profile of bidder/Partner
Sl.No
Particulars
1
2
Company Name
Date of Incorporation
Name of Indian representative/office (indicate: own, dealer, distributor,
JV)
Company Head Office address
* Contact person(s)
* Designation
* Phone Number
* Mobile Number
* Fax Number
* E-mail Address
Address of Indian representative/office
* Contact person(s)
* Phone Number
* Fax Number
* E-mail Address
Number of Employees supporting the project – In India:
India:
 Marketing/Sales
 Technical Support
 Research and Development
 Implementation
- Outside India:
 Marketing/Sales
 Technical Support
 Research and Development
 Implementation
Ownership structure (e.g. Inc., partnership)
* Who are the primary shareholders?
* State the major shareholders with percentage holding in case of
limited companies.
Location:
Support (e.g. Asia Pacific, India )
Since when has the support centre existed in India?
Provide the range of services offered covering service description and
different schemes available for:
Customization
Implementation Support
Ongoing support (AMC,HelpDesk)
Training
Any Others (specify)
3
4
5
6
7
8
9
Integrated Risk Management Department, The South Indian Bank Limited.
Response
Page 129
10
11
12
13
State pending or past litigation if any within the last 3 years with details
and explain reasons. Please also mention any claims/complaints
received in the last three years.
Enclose abstracts of the Balance sheet and P/L Account for the last
three years
Independent analyst research report (if any)
Major changes in Management for last 3 years
Integrated Risk Management Department, The South Indian Bank Limited.
Page 130
Annexure-6
Implementation methodology
Sl. No.
1
i.
ii.
iii.
iv.
v.
vi.
vii.
viii.
2
3
4
5
i.
ii.
iii.
iv.
v.
vi.
vii.
viii.
ix.
x.
xi.
xii.
xiii.
xiv.
Details of methodology / approach
The methodology section should adequately address the following
stages of the project:
Frequency and approach for periodic reporting on the progress of
the project and actual status vis à vis scheduled status
Detailed Study of Current State, with detailed work steps and
deliverables
Gap analysis including identification and resolution of gaps
Customization, development and necessary work around
Building up of interfaces with various applications currently used
by the Bank
Setting up of the data center and the disaster recovery site
User acceptance testing
Planning for roll out and identification of key issues that may arise
along with proposed solutions
Timelines
Project management activities
Roles and responsibilities of proposed personnel both from the
vendor and bank end.
Following details with respect to the methodology followed by the
vendor in Project Management for a Public/Private Sector Bank
Project Name
Project Location
Client Name
Client address
Client contact/reference person(s)
Project started (month/year)
Project elapsed time – months
Man months effort
Project Size (No of branches, modules covered and any other
relevant details)
Name of senior project staff
Nature of the Project
Project Management Methodology used
Role of the Bidder, whether complete end to end involvement or
for a particular module
Project detail ((Broad detail – information about all activities
handled, modules forming part of the Operational Risk Project of
the Client Bank, associated activities, time lines activity wise and
module wise may be detailed.)
Response
 The bidders are expected to provide crisp descriptive response against each point above.
Integrated Risk Management Department, The South Indian Bank Limited.
Page 131
Annexure-7
Reference site details
The reference sites submitted must be necessarily of those Banks where the proposed
Bidder/Proposed software solution has been awarded the contract in the last five years prior to
the last date for submission of bids at The South Indian Bank Ltd. For those references where the
offered solution is accepted but implementation is not started, the acceptance should be valid as
on the last date for submission of bids at The South Indian Bank Ltd.
Please provide reference details in the format defined below:
Particulars
Name of the Bank/ Financial Institution
Country of Operation
Address of the Organization
Annual Turnover of the Organization for the Financial Year 2012-13
Date of commencement of Project
Date of completion of Project
Scope of Work for Solution
Partner for the project
Project Start date and End date
List all the modules/components of the system being used
Type of Architecture in which the system has been implemented.
Implementation details e.g. Number of Sites, time taken for
Operationalization, volumes of processing etc.
State the duration of the implementation
Number of users and the geographical spread of the implementation
Average Team size on site for project implementation (SI & OEM Team)
Contact Details from the Bank/Financial Institution for reference
 Name of the Contact Person
 Designation
 Phone Number/e-mail
Response
Note:
 The bidder has to submit a consent letter for conducting a reference site visit by the South
Indian Bank‟s project evaluation team. The letter has to be on the letter head of the
Bank/Financial Institution.
Integrated Risk Management Department, The South Indian Bank Limited.
Page 132
Annexure-8
Past Experience
List of major customers where the proposed CRMS, ORMS, MRMS, ALMS and Integrated
Capital Computation Module solution have been implemented/under implementation in
India/outside and their reference details
Sl.
No.
Name and
complete
Postal Address
of the
Customer
Name & Brief
scope of work
done by OEM
(specify the size
of the Bank, the
approaches
supported
etc.)
Name &
Brief scope
of work
done by SI
(specify the
size of the
Bank, the
approaches
supported
etc.)
Attach
reference
Letter
Contact
Details
(Name,
Designation,
Phone,
Email)
Project Status
(Completed/
Under
Implementation,
Start Date, End
Date)
*In cases where SI acts as bidder, while counting the number of Banks for the purpose of
assigning marks under this parameter only the number of Banks where SI has customized the
software of the OEM shall be taken.
(Enclose necessary documentary proof such as reference letter)
Integrated Risk Management Department, The South Indian Bank Limited.
Page 133
Annexure-9
Team profile
A. General information
The general information on staff strength of the bidder/partner should be furnished in the
following format.
Requirement
Current strength of employees in the bidder‟s organization with experience on
the proposed product(s)
Current strength of employees in the bidder‟s organization with experience in
similar projects
Certifications possessed by the Bidder in connection with the quality of internal
processes and services delivered/ methodology used in delivery
 Organization‟s Competence for the Assignment:
 No. of Risk Management Professionals
 Proven track record and in-house technology skills for supporting
software by way of Availability of Quality certificates (ISO / SEI/
CMM etc.)
Response
B. Specific information to be furnished in respect of each team member
Requirement
Name of Member on the Project Implementation Team.
Designation and Role
Area of Expertise (Subject Matter Expert)
 Credit Risk
 Market Risk
 Operational Risk
 ALM
 FTP
 Capital Computation
Role of Team Member – onsite or offsite. If onsite then no. of man days
expected to spend onsite during the implementation period
Organization Name (Bidder has to specify if the member is a part of the
Bidder‟s organization or partner‟s organization)
Professional Qualifications
Risk Management Experience with the bidding firm/OEM in terms of areas and
no of years of expertise
Risk Management Experience with other companies firm in terms of areas and
no of years of expertise (Mention if he/she has worked with Banks earlier)
Integrated Risk Management Department, The South Indian Bank Limited.
Response
Page 134
IT Implementation and Project Management Expertise with the bidding firm/
OEM in terms of years and areas of expertise
IT Implementation and Project Management Expertise with other companies in
terms of years and areas of expertise
Certifications and Accreditations including Membership of any professional
body
Details of similar projects handled with details of client, representing which
organization, role of the member team or team leader etc. in India and
Internationally
Experience of the resource in the implementation of the Proposed solution
offered in this Bid
Integrated Risk Management Department, The South Indian Bank Limited.
Page 135
Annexure-10
Training
A. General Information
Particulars
Response
No: of Implementation trainings have been undertaken by the Bidder/partner
A brief description on the Training approach taken by the Bidder/partner
Names and experience of all trainers with the Bidder who would be involved
with the Project
B. Specific information to be furnished in respect of each training session*
Particulars
Response
Name of the Bank where product was implemented and the training conducted
Date and place where training conducted
Training audience
Duration of training
Location
*This information should be backed by the documentary proof in the customer-Bank‟s letter
head.
Integrated Risk Management Department, The South Indian Bank Limited.
Page 136
Annexure-11
Cover Letter for Commercial Bid
Note: This Cover Letter for Commercial Bid from the Bidder should be on the letterhead of the
Bidder and should be signed by an authorized person.
Date:
To,
The Chief General Manager (IRMD)
The South Indian Bank Ltd
Integrated Risk Management Department,
SIB House, Head Office,
2nd Floor, Mission Quarters
Thrissur , Kerala,
India – 680001
Dear Sir/ Madam,
Subject: Response to RFP Ref No: IRMD/001/2014 for Solution to Implement of Enterprise
Wide Integrated Risk Management Architecture under Basel II and Basel III norms of
RBI/BCBS
Having examined the Bidding Documents, the receipt of which is hereby duly acknowledged,
we, the undersigned, offer to supply & deliver the Solution to Implement Enterprise Wide
Integrated Risk Management Solution under Basel II and Basel III, inconformity with the said
Bidding documents for the sum of ...................………….. (Total amount in words and figures) or
such other sums as may be ascertained in accordance with the commercial bid for hardware and
software and total cost of ownership (termed as Annexure-12 and Annexure-13 in your RFP)
attached herewith and made part of this Proposal.
We undertake, if our Proposal is accepted, to deliver, install and commission the system, in
accordance with Requirements specified within the RFP for Solution to Implement Enterprisewide Integrated Risk Management Architecture in accordance with the International Best
Practices and Guidelines of RBI/BCBS on Basel II, Basel- III, ALM and FTP
We agree to abide by the Proposal and the rates quoted therein for the orders awarded by the
Bank.
Until a formal contract is prepared and executed, this bid, together with your written acceptance
thereof and your notification of award shall constitute a binding Contract between us.
We undertake that, in competing for (and, if the award is made to us, in executing) the above
contract, we will strictly observe the laws in force in India.
Integrated Risk Management Department, The South Indian Bank Limited.
Page 137
We understand that you are not bound to accept the lowest or any Proposal you may receive.
Dated this ....... day of ............................ 2014
_________________________________ _______________________________ _
(Signature) (Name) (In the capacity of)
Duly authorized to sign Proposal for and on behalf of
_________________________________
Integrated Risk Management Department, The South Indian Bank Limited.
Page 138
Annexure-12
Format for furnishing the price of Software/Hardware (Bill of Material)
A. The format for furnishing the price of software
The bidder shall furnish the price of each module namely, credit, operational, market and
ALM/FTP in the format given below. Further if he is planning to implement a single integrated
software solution, he shall in addition to the price of each module quote the price of entire
integrated system in the format given below
Sl.
No
A
1
2
3
4
5
6
7
8
Item
Description
Unit Price
in Indian
Rs.
Total Price
in Indian
Rupees
Comments
by Vendor
Credit/Market/Operational/ALM/FTP risk
System
License cost
If the software is sold
in modular format,
details of the cost of
each module must be
elaborated
Customization Cost
If the software is sold
in modular format,
details of the cost of
each module must be
elaborated
Implementation &
Project Management
cost
Cost of Application
Programming
Interface i.e.,
Interface
development
Cost of Training
Post-implementation
on-site support for 3
months from Go Live
date
Annual Maintenance/
I year
support Contract
II year
charges after
III year
warranty period.
IV year
V year
Charges for Data
migration to new
system
Integrated Risk Management Department, The South Indian Bank Limited.
Page 139
Sl.
No
9
10
11
12
13
14
15
16
17
Item
Description
Unit Price
in Indian
Rs.
Total Price
in Indian
Rupees
Comments
by Vendor
Any other charges
such as FMS etc not
covered above.
Please specify
Operating System
software for Primary
Site
Operating System
software for DR Site
Database software as
specified in the
response bid by the
vendors cum required
licences, ATS if any
for Primary Site
Database software as
specified in the
response bid by the
vendors cum required
licenses, ATS if any
for DR Site
Environmental &
backup software as
specified in the
response by the
vendors cum required
licenses, ATS if any
for Primary Site
Environmental &
backup software as
specified in the
response by the
vendors cum required
licenses, ATS if any
for DR Site
Middleware
Any other cost not
included here.
TOTAL Cost of all
the above
Give the details
Integrated Risk Management Department, The South Indian Bank Limited.
Page 140
B
1
2
3
4
5
6
7
8
9
10
11
12
Capital Computation System
License cost
If the software is sold
in modular format,
details of the cost of
each module must be
elaborated
Customization Cost
If the software is sold
in modular format,
details of the cost of
each module must be
elaborated
Implementation &
Project Management
cost
Cost of Application
Programming
Interface i.e.,
Interface
development
Cost of Training
Post-implementation
on-site support for 3
months from Go Live
date
Annual Maintenance/
I year
support Contract
II year
charges after
III year
warranty period.
IV year
V year
Charges for Data
migration to new
system
Any other charges
such as FMS etc not
covered above.
Please specify
Operating System
software for Primary
Site
Operating System
software for DR Site
Database software as
specified in the
response bid by the
vendors cum required
licences, ATS if any
Integrated Risk Management Department, The South Indian Bank Limited.
Page 141
for Primary Site
13
14
15
Database software as
specified in the
response bid by the
vendors cum required
licenses, ATS if any
for DR Site
Environmental &
backup software as
specified in the
response by the
vendors cum required
licenses, ATS if any
for Primary Site
Environmental &
backup software as
specified in the
response by the
vendors cum required
licenses, ATS if any
for DR Site
16
Middleware
17
Any other cost not
included here.
TOTAL Cost of all
the above
Give the details
Note: Applicable taxes and Duties: Details of all applicable taxes to be paid by the Bank must
be specified like sale tax, service tax etc. Applicable Duties to include customs, Excise etc. All
taxes and duties to be given in Rupee value only.
Integrated Risk Management Department, The South Indian Bank Limited.
Page 142
Dated……
(Signature)
(In the capacity of)
Duly authorized to sign bid for & on behalf of
(Name & Address of the Bidder)
B. The format for furnishing the price of hardware*
Sl.
No
1
2
3
4
Item Description
No: of
units
(A)
Unit
price
(B_)
Sub
Total
Price
(A x B)
Taxes
Total
price
including
taxes
Hardware (including for both
DC & DR Site)
Servers
Operating system
Storage (SAN)
Rack with KVM switch, power
supply, Network & security
requirements, switches, routers,
etc.
Hardware required for SLA
Monitoring
AMC & ATS cost as per Part II
Facilities Management (both
at DC & DR)
Other Cost** (if any)
Total
*
In case the bidder is a SI, the hardware specification given in this part should be endorsed
by OEM whose software is proposed to be deployed by SI.
**
Any other system upgradation requirements such as LAN, bandwidth etc to be part of the
total cost.
The hardware proposed should have a warranty period of 3 years.
Integrated Risk Management Department, The South Indian Bank Limited.
Page 143
Annexure-13
Table for Arriving at the Total Ownership Cost
TABLE-A: Cost of Software, Hardware Customization, Network, Training, etc
Sl. No
Item description
Unit Price
Total Price
Taxes / VAT
if any
Total
payable
GRAND TOTAL
TABLE-B: Cost of AMC after the warranty for Software, Customization, Network, etc
S.No
Item description
AMC amount
for full period
after warranty
Service Taxes
if any
Total payable
GRAND TOTAL
(Amt. in Indian Rupees only)
TOTAL PAYABLE IN INDIAN RUPEES AS PER TABLE A
TOTAL PAYABLE IN INDIAN RUPEES AS PER TABLE B
TOTAL BID PRICE.
Amount in words:
Date:
Integrated Risk Management Department, The South Indian Bank Limited.
Page 144
Annexure-14
Bid submission Covering Letter
Note: This Bid Offer Covering letter should be on the letterhead of the Bidder and should be
signed by an authorized person.
Date:
To,
The Chief General Manager (IRMD)
The South Indian Bank Ltd
Integrated Risk Management Department,
SIB House, Head Office,
2nd Floor, Mission Quarters
Thrissur , Kerala,
India – 680001
Dear Sir/ Madam,
Subject: Response to RFP Ref No: IRMD/001/2014 for Solution to Implement of Enterprise
Wide Integrated Risk Management Architecture under Basel II and Basel III norms of
RBI/BCBS
1. With reference to the RFP, having examined and understood the instructions, terms and
conditions forming part of the RFP, we hereby enclose our offer for the implementation of
Enterprise Wide Integrated Risk Management Solution: Credit Risk Management Solution,
Operational Risk Management Solution, Market Risk Management Solution, Asset Liability
Management System and Integrated Capital Computation and Reporting Module for
Advanced Approach under Basel II and Basel III.
2. We agree and undertake that, if our Bid is accepted, we shall deliver, install and commission
the Solution in accordance with the Requirements specified within the RFP for Solution to
Implement Enterprise-wide Integrated Risk Management Architecture under Basel II and
Basel III within the timeframe specified, starting from the date of receipt of notification of
award from The South Indian Bank Ltd.
3. We acknowledge having received the following addenda to the bid document:
Addendum No.
Dated
4. If our Bid is accepted, we will obtain performance guarantee of a Bank for a sum equivalent
to 10 percent of the Contract Price for the due performance of the Contract, in the form
prescribed by the Bank
Integrated Risk Management Department, The South Indian Bank Limited.
Page 145
5. All the details mentioned by us are true and correct and if Bank observes any
misrepresentation of facts on any matter at any stage, Bank has the absolute right to reject
the bid / proposal and disqualify us from the selection process.
6. We confirm that the offer is in conformity with the terms and conditions as mentioned in
RFP and it shall remain valid for 90 days from the last date of the acceptance of this bid.
7. We undertake that, in competing for (and, if the award is made to us, in executing) the above
contract, we will strictly observe the laws in force in India.
8. We are also aware that The South Indian Bank has also right to re-issue / recommence the
bid, to which we do not have right to object and have no reservation in this regard; the
decision of The South Indian Bank in this regard shall be final, conclusive and binding upon
us.
9. We confirm that our company/system integrator/other partners participating in this bidding
as part of the consortium have not been black listed/banned by a regulatory authority and
any previous ban is not in force at present.
10. We enclose a Demand Draft /Bankers' Cheque bearing No……………. dated ……/ …../20
drawn by ……….. Bank, branch, in favour of The South Indian Bank, payable at Thrissur
for a sum of Rs 25,000/.(Rupees Twenty five thousand only) towards non-refundable Bid
Submission fee.
OR
We confirm that the UTR number for the remittance of non-refundable Bid Submission fee
of Rs. 25000/.(Rupees Twenty five thousand only) is …………………….
Dated this ....... day of ............................ 2014.
Yours faithfully,
(Name of Authorized Signatory)
(Designation)
Duly authorized to sign Bid for and on behalf of
Integrated Risk Management Department, The South Indian Bank Limited.
Page 146
Annexure-15
Notification of Acceptance
(On organization‟s letter head)
Place:
Date:
To
The Chief General Manager (IRMD)
The South Indian Bank Ltd
Integrated Risk Management Department,
SIB House, Head Office,
2nd Floor, Mission Quarters
Thrissur, Kerala,
India – 680001
Dear Sir,
SUB: RFP No IRMD/ RFP /001/2014 Dt 08.03.2014
REF: Your Letter No: - _________________ Dt ________________.
This has reference to your letter on the subject, notifying us about the selection of our bid.
We hereby convey our absolute, unconditional and unqualified acceptance for the work and
activities as per the Scope of Work mentioned in the subject RFP.
Signature of Authorised Person
(Seal)
Integrated Risk Management Department, The South Indian Bank Limited.
Page 147
Annexure-16
Specimen contract form
THIS AGREEMENT (the
……………………. 2014.
Agreement)
made
at…………………the………day
of
BETWEEN
The South Indian Bank Limited a company registered under the Companies Act, 1956 (1
of1956) and a Banking company within the meaning of SECTION 5(c) of the Banking Regulation
Act, 1949 (10 of 1949) and having its registered office at The South Indian Bank Limited,
SIB House, Mission Quarters, Thrissur – 680 001 (hereinafter called “The South Indian Bank
Limited / Purchaser ” which expression shall unless it be repugnant to the subject, context or
meaning thereof shall be deemed to mean and include its successors and assigns) of the ONE
PART
AND
……………. (Name of successful Bidder) of …………………… (Please specify the registered
office of the (Implementation partner) (hereinafter called “the Implementation partner which
expression shall unless it be repugnant to the subject, context or meaning thereof shall be deemed
to mean and include its successors) of the OTHER PART.
The Purchaser and Implementation partner are hereinafter collectively referred to as "Parties".
WHEREAS the Purchaser invited bids for certain Services namely „Implementation of
Enterprise-wide Integrated Risk Management Architecture in accordance with the
International Best Practices and Guidelines of RBI/BCBS on Basel II, Basel- III, ALM and
FTP ‟
AND WHEREAS the purchaser has accepted a bid by the Implementation partner for rendering
of the Services for the sum of ………………………( Contract Price in Words and Figures)
(hereinafter called “the Contract Price”).
NOW THIS AGREEEMENT WITNESSETH AND IT IS HEREBY AGREED BY AND
BETWEEN THE PARTIES HERETO AS FOLLOWS
In consideration of the payments to be made by the South Indian Bank Limited to the
Implementation partner as hereinabove mentioned, the Implementation partner hereby agrees with
the Purchaser to provide or render the Services, to furnish necessary undertakings, etc. as
mentioned in the RFP documents, this Agreement (hereinafter collectively referred to as “the said
documents”) strictly in conformity in all respects with the provisions of the said documents
(1) In this Agreement words and expressions shall have the same meanings as are respectively
Integrated Risk Management Department, The South Indian Bank Limited.
Page 148
assigned to them in the terms and conditions of RFP / Contract / Agreement referred to.
(2) The RFP Document titled_________________________ shall be deemed to form and be
read and construed as part of this Agreement, which, inter alia, includes
a.
b.
c.
d.
e.
f.
Scope of Work
Objective of RFP document
Eligibility Criteria
Functional and Technical requirements
Payment terms
Submission of bids
(All the above are collectively referred to as "the said documents")
(3) The Purchaser hereby agrees and covenants to pay the Implementation partner in
consideration of the rendering of the Services and the remedying of defects, if any therein,
etc., the Contract price as may become payable under the provisions of the said documents at
the times and in the manner prescribed by the said documents
(4) The Implementation partner shall provide the services and documents and records as per the
scope of the service / work as contained in the said documents
(5) All applicable taxes shall be deducted by the South Indian Bank Limited at source according
to the tax rate prevalent at the time of making payment.
(6) The Contract price quoted by the implementation partner in Bid shall be finalized and
inclusive of all duties, service tax ,levies, other taxes, traveling expenses , lodging /boarding,
local conveyance or any other expenses of whatsoever nature for the said service.
(7) In order to induce The South Indian Bank Limited to enter into the Contract/Agreement, the
Implementation partner hereby make following representations
a. It is duly organized and validly existing organization under Indian Laws.
b. It has power and authority to execute and deliver this Agreement/Contract and has taken
all necessary steps to authorize execution, delivery and performance of this
Agreement/Contract
c. It has power and authority to do all things necessary and appropriate and to perform
Services contemplated under this Agreement/Contract
d. neither the execution and delivery by the Implementation partner of the
Contract/Agreement nor the Implementation partner's compliance with or performance of
the terms and provisions of the Contract/Agreement (i) will contravene any provision of
any applicable law or any order, writ, injunction or decree of any court or governmental
Integrated Risk Management Department, The South Indian Bank Limited.
Page 149
authority binding on the Implementation partner (ii) will conflict or be inconsistent with
or result in any breach of any of the terms, covenants, conditions or provisions of, or
constitute a default under any agreement, contract or instrument to which the
Implementation partner is a party or by which it or any of its property or assets is bound
or to which it may be subject or (iii) will violate any provision of the Memorandum and
Articles of Association/ partnership deed of the Implementation partner
e. has made or shall make all necessary arrangement for performance of the services. In
case of failure on the part of Implementation partner to provide any part of services as
mentioned The South Indian Bank Limited has a right not to pay for such particular part
of services
f. That the Implementation partner is a company/ partnership firm which has the requisite
qualifications, skills, experience and expertise to give service to third parties
g. That Implementation partner possesses the technical know-how, the financial
wherewithal, the power and the authority to enter into the Contract /Agreement.
h. That the Implementation partner is not involved in any litigation, potential, threatened
and existing, that may have an impact of affecting or compromising the performance of
Service under the Contract/Agreement. No inquiries or investigations have been
threatened, commenced or pending against the Implementation partner or its team
members by any statutory or regulatory or investigative agencies.
i. That the representations made by the Implementation partner in its bid are and shall
continue to remain true and fulfill all the requirements as are necessary for executing the
duties, obligations and responsibilities as laid down in the Contract/Agreement and the
Bid Documents and unless The South Indian Bank Limited specifies to the contrary, the
Implementation partner shall be bound by all the terms of the bid
j. That the Implementation partner has the professional skills, personnel and
resources/authorizations that are necessary for giving the Service or to perform its
obligations under the bid.
k. That the execution of the Service herein is and shall be in accordance and in compliance
with all applicable laws
l. That all conditions precedent under the Contract/Agreement / bid document have been
complied.
m. That the Implementation partner certifies that all registrations, recordings, filings and
notarizations of the Contract/Agreement and all payments of any tax or duty, registration
charges or similar amounts which are required to be effected or made by the
Integrated Risk Management Department, The South Indian Bank Limited.
Page 150
Implementation partner which is necessary to ensure the legality, validity, enforceability
or admissibility in evidence of the Contract/Agreement have been made.
n. That the Implementation Partner confirms that there has not and shall not occur any
execution, amendment or modification of any agreement/contract without the prior
written consent
of The South Indian Bank Limited , which may directly or indirectly have a bearing on
the Contract/Agreement
(8) Indemnity
Implementation partner shall indemnify and keep The South Indian Bank Limited harmless
and indemnified from and against all claims, liabilities, losses and incurred costs, fines,
penalties, expenses, taxes, assessment, punitive damages, fees (including advocate‟s/
attorney‟s fee), liabilities, judgments, awards, assessments, obligations, damages, etc., which
The South Indian Bank Limited may suffer or incur arising out of, or in connection with:
a) any act, neglect, default or omission on the part of the Implementation partner, its
subsidiaries or any person associated with the Implementation partner, including but not
limited to liabilities arising from non compliance of Standards and Regulations
prescribed by regulator, from time to time, unauthorized use or disclosure of Confidential
Information and failure to comply with data protection as prescribed from time to time;
b) any breach by the Implementation partner of the terms and conditions of its engagement
or its obligations under the said documents;
c) any breach by the Implementation partner of its obligations under any Law(s) or contract,
etc;
d) default or omission on the part of the Implementation partner to follow statutory
instructions and guidelines issued by the Government of India and any other
governmental authority.
In the event of a third party bringing a claim or action against The South Indian Bank, as a
consequence of the implementation or use of the software or solution provided by the
Implementation partner, the Implementation partner shall defend and / or assist The South
Indian Bank Limited in defending, at the Implementation partner cost, such claims or actions,
either in a legal proceeding or otherwise;
(9) Termination of Agreement /Contract
The South Indian Bank Limited may terminate this Agreement/Contract for any breach of the
terms and conditions of this Agreement/Contract / bid by giving 15 days notice to the
Integrated Risk Management Department, The South Indian Bank Limited.
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Implementation partner requiring it to make good the default(s) within notice period.
Termination of this Agreement/Contract shall not affect or prejudice any provisions of this
Agreement/Contract, which are expressly or by implication provided to continue in effect
after such termination
Without prejudice to the right to effect the penalty conditions mentioned within Service
Level Agreement mentioned within the said documents, The South Indian Bank Limited may
impose penalty, if there is any delay in the implementation of the project due to
implementation partner‟s fault in complying with time schedule specified in this contract.
The penalty shall be levied at 1% on the total project implementation cost to the bidder for
each week of delay. This penalty will be subject to an upper limit of 10% on the total project
implementation cost. Thereafter the order/contract may be cancelled and amount paid if any,
may be recovered with 1.25% interest per month. If the delay exceeds six weeks, The South
Indian Bank limited reserves the right to terminate the services Agreement unconditionally.
(10) Notices
All notices in connection with this Agreement/Contract, shall be given in writing hand
delivered or sent by courier or by facsimile transmission, confirmed by courier to the address
or fax number specified below, or to such other address or number which the parties may
have last specified. All such notices shall be effective upon receipt to
1. The Chief General Manager (IRMD)
The South Indian Bank Ltd
Integrated Risk Management Department,
SIB House, Head Office,
2nd Floor, Mission Quarters, Thrissur , Kerala, India – 680001.
2. Implementation Partner,
Address.
Either of the parties hereto may by notice change the address to which such notices and
communication are to be delivered or transmitted
(11) Compliance with RBI and other Regulatory Requirements
The Implementation partner shall individually obtain the necessary regulatory approvals from
the RBI or other regulatory bodies, if any required, for the Contract .Any demand for
information regarding any of the matters to the extent mutually agreeable under this
Agreement called for by the RBI or any other regulatory body shall be promptly responded to
by the concerned Party. The Implementation Partner undertakes to comply all the statutory
and regulatory requirements under the applicable laws in connection with Service including
Labour and Industrial Laws. In the event of any default by the Implementation partner which
results in any actionable claim against The South Indian Bank Limited, the Implementation
Integrated Risk Management Department, The South Indian Bank Limited.
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partners shall keep The South Indian Bank Limited indemnified against all such claims and
actions.
(12) Governing Law
The provisions of this Agreement shall be governed by the laws of India and the competent
court at Thrissur shall have exclusive jurisdiction in relation thereto even though other Courts
in India may also have similar jurisdictions.
(13) Headings
The heading of various Articles and Sections herein are for convenience of reference and are
not deemed to affect the construction of the relative provisions
(14) Effective date and validity
This Agreement/Contract shall become binding on the parties on and from ____________. It
shall be in force until its termination or _____________________, whichever is earlier
(15) Force Majeure
If the performance as specified in this Contract/Agreement is prevented, restricted, delayed
or interfered by reason of: Fire, explosion, cyclone, floods, war, revolution, acts of public
enemies, blockage or embargo, any law, order, proclamation, ordinance demand or
requirements of any Government or authority or representative of any such Government or
regulations , strikes, shutdowns or labor disputes which are not instigated for the purpose of
avoiding obligations herein, then, notwithstanding anything here before contained, the party
affected shall be excused from its performance to the extent such performance relates to
prevention, restriction, delay or interference and provided the party so affected uses its best
efforts to remove such cause of non- performance and when removed the party shall continue
performance with utmost dispatch
If a Force Majeure situation arises, the Implementation partner shall promptly notify The
South Indian Bank Limited in writing of such conditions and the cause thereof. Unless
otherwise directed by The South Indian Bank Limited in writing, the Implementation partner
shall continue to perform its obligations under the Contract/Agreement as far as is reasonably
practical and shall seek all reasonable alternative means for performance not prevented by the
Force Majeure event.
The South Indian Bank Limited may terminate the
Contract/Agreement, by giving a written notice of minimum 15 days to the Implementation
partner, if as a result of Force Majeure the Implementation partner is unable to perform a
material portion of the work assigned to him for a period of more than 30 days.
Integrated Risk Management Department, The South Indian Bank Limited.
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IN WITNESS WHEREOF the Parties hereto have caused this Agreement to be executed on the
day, month and year first above written.
Signed and Delivered by
The within named
The South Indian Bank Limited/ Purchaser
Signature:
Name
Date: - ….......................
IN THE PRESENCE OF
1. Signature :
Name
:
Address :
2. Signature :
Name
:
Address
:
Signed and Delivered by ......... .........................
the within named
Implementation Partner
M/s. ..................................
.................................
Date :- .......................
IN THE PRESENCE OF :
1. Signature
Name
Address
:
:
:
2. Signature :
Name
:
Address
:
Integrated Risk Management Department, The South Indian Bank Limited.
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Annexure-17
Performance Bank Guarantee Format
Bank Guarantee No.
:
Bank Guarantee Amount
:
Expiry Date
:
Claim Period
:
Account
:
GUARANTEE FOR PERFORMANCE OF CONTRACT/AGREEMENT
THIS GUARANTEE AGREEMENT executed at ________ day of_____________ Two
Thousand Fourteen
BY :
______________________ bank, a body corporate constituted under _______________, having
its Registered Office/ Head Office at ______________, and a Branch Office
at_____________________________________________________ (hereinafter referred to as
“the Guarantor”, which expression shall, unless it be repugnant to the subject, meaning or
context thereof, be deemed to mean and include its successors and assigns)
IN FAVOUR OF:
The South Indian Bank Limited, a banking company, established under the Companies Act 1956
and having its Registered Office at SIB House, Mission Quarters, Thrissur, Kerala – 680001
(hereinafter referred to as “Bank” which expression shall unless it be repugnant to the subject,
meaning or context thereof, be deemed to mean and include its successors and assigns),
WHEREAS Bank had called for the bids for engagement of implementation partner who can
implement Enterprise-wide Integrated Risk Management Architecture in accordance with the
International Best Practices and Guidelines of RBI/BCBS on Basel II, Basel- III, ALM and FTP
(the “Project”)
AND WHEREAS M/s……………………… have been appointed as the Implementation partner
(hereinafter referred to as " Implementation partner") for the said Project and accordingly has
entered into Contract / Agreement on ……….. (Agreement) with Bank subject to the terms and
conditions contained in the said documents (defined herein below) and the Implementation
partner has duly confirmed the same.
AND WHEREAS pursuant to the Bid Documents, the Agreement, and the other related
documents (hereinafter collectively referred to as “the said documents”), the Bank has agreed to
Integrated Risk Management Department, The South Indian Bank Limited.
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avail from M/s……………………. and M/s……………………………. has agreed to provide to
the Bank, the Services more particularly described in the said documents (hereinafter
collectively referred to as “the Services”), subject to payment of the contract price as stated in
the said documents and also subject to the terms, conditions, covenants, provisions and
stipulations contained the said documents.
AND WHEREAS the Implementation partner has duly signed the said documents.
AND WHEREAS in terms of the said documents, inter alia, the Implementation partner is
required to procure an unconditional and irrevocable performance Bank guarantee, in favour of
the Bank, from a bank acceptable to the Bank for a sum of Rs…………………………………
(Rupess…………………………………………………….. Only) being 10% of the total contract
value for the faithful observance and performance by the Implementation partner of the terms,
conditions, covenants, stipulations, provisions of the Agreement /the said documents.
AND WHEREAS at the request of the Implementation partner, the Guarantor has agreed to issue
the guarantee in favour of the Bank for a sum of Rs. ………………………………
(Rupees………………………………………………..Only) being the 10% of the total Contract
value
AND WHEREAS at the request of the Implementation partner, the Guarantor has agreed to
guarantee the Bank that the Implementation partner shall faithfully observe and perform the
terms of the said documents
NOW THEREFORE THIS AGREEMENT WITNESSETH AS FOLLOWS:
In consideration of the above premises, the Guarantor hereby unconditionally, absolutely and
irrevocably guarantees to the Bank as follows:
(1) The Guarantor hereby agree and guarantee that the Implementation partner shall faithfully
observe and perform all the terms and conditions stipulated in the Contract/Agreement and the
said documents.
(2) The Guarantor hereby guarantees and undertakes to pay, on demand and without demur,
reservation, contest, recourse or protest or without any reference to the Implementation partner,
to the Bank at its office at Thrissur forthwith, and all monies payable by the Implementation
partner to the extent of Rs.………………………………………. against any loss, costs,
damages, etc. suffered by the Bank on account of default of the Implementation partner in the
faithful observance and performance of the terms, conditions, covenants, stipulations, provisions
of the said documents. Any such demand or claim made by the Bank, to the Guarantor shall be
final, conclusive and binding notwithstanding any difference or any dispute between the Bank
and the Implementation partner or any dispute between the Bank and the Implementation partner
pending before any Court, Tribunal, Arbitrator, or any other authority.
Integrated Risk Management Department, The South Indian Bank Limited.
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(3) The Guarantor agrees and undertakes not to revoke this Guarantee during the currency of
these presents, without the previous written consent of the Bank and further agrees that the
Guarantee herein contained shall continue to be enforceable until and unless it is discharged
earlier by the Bank, in writing.
(4) The Bank shall be the sole judge to decide whether the Implementation partner has failed to
perform the terms of the said documents for providing the Services by the Implementation
partner to the Bank, and on account of the said failure what amount has become payable by the
Implementation partner to the Bank under this Guarantee. The decision of the Bank in this behalf
shall be final, conclusive and binding on the Guarantor and the Guarantor shall not be entitled to
demand the Bank to establish its claim under this Guarantee but shall pay the sums demanded
without any objection, whatsoever.
(5) To give effect to this guarantee, the Guarantor will be deemed to be the Principal Debtor to
the Bank.
(6) The liability of the Guarantor, under this Guarantee shall not be affected by
(a) any change in the constitution or winding up of the Implementation partner or any absorption,
merger or
(b) amalgamation of the Implementation partner with any other company, corporation or
concern; or
(c) any change in the management of the Implementation partner or takeover of the management
of the Implementation partner by the Government or by any other authority; or
(d) acquisition or rationalization of the Implementation partner and/or of any of its
undertaking(s) pursuant to any law; or
(e) any change in the constitution of Bank / Implementation partner; or
(f) any change in the set up of the Guarantor which may be by way of change in the constitution,
(g) winding up, voluntary or otherwise, absorption, merger or amalgamation or otherwise; or the
absence or deficiency of powers on the part of the Guarantor to give Guarantees and/or
Indemnities or any irregularity in the exercise of such powers.
(7) This Bank guarantee shall be valid for 8 years from the date of signing the contract.
(8) Notwithstanding anything contained in this Guarantee, the Guarantor hereby agrees and
undertakes to extend the validity period of this guarantee for a further period as may be requested
by the Bank, from time to time.
(9) This guarantee shall be binding upon us and successors -in - interest and shall be irrevocable.
Integrated Risk Management Department, The South Indian Bank Limited.
Page 157
(10) For all purposes connected with this Guarantee and in respect of all disputes and differences
under or in respect of these presents or arising there from the courts of Thrissur where the Bank
has its Registered Office shall alone have jurisdiction to the exclusion of all other courts.
(11) Notwithstanding anything contained herein above
I. Our liability under this Bank Guarantee shall not exceed Rs……………………………….
(Rupees ……………………….. only)
III. This Bank Guarantee shall be valid up to………………………….
IV. We are liable to pay the guaranteed amount or any part thereof under this Bank Guarantee
only and only if you serve on us a written claim or demand on or
before ……………………………..…
IN WITNESS WHEREOF the Guarantor has caused these presents to be executed on the day,
month and year first herein above written as hereinafter appearing.
SIGNED AND DELIVERED BY
the within named Guarantor,
________________________________,
by the hand of Shri.____________________, its authorised official.
Integrated Risk Management Department, The South Indian Bank Limited.
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