Bom Important

1
Bank of Maharashtra
(One Family One Bank Mahabank)

Request for Proposal (RFP)

Consultancy services for

Risk Management Advanced Approaches under Basel II Framework

Tender Reference Number IRMD/01/2011

Bank of Maharashtra
Integrated Risk management Department
Central Office, Lokmangal
1501, Shivaji Nagar, Pune 411 005
020 25536011, 020 - 25536268

Price of the Tender Document: Rs. 15000/- (Rs. Fifteen thousand only)
(Non refundable)

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OBJECTIVES

BANK OF MAHARASHTRA is a nationalized bank with a standing of more than 75
years. The Bank has branch offices across the length and breadth of the country. In the
state of Maharashtra itself it has the largest network of branches by any Public Sector
Bank in a state. All the branches of the Bank are under Core banking Solution (CBS). It
has a three tier organizational set up consisting of branches, Regional Offices and
Central Office.

The Bank intends to have Consultancy Services, through an open tendering process, for
implementing Advanced Approaches of the Basel II framework for Credit, Market and
Operational Risks in line with the guidelines of RBI & Banks Policy on Risk Management.

This Request for Proposal (RFP) seeks to appoint a consultant who has the capability
and experience of providing consultancy services for smooth implementation of
Advanced Approaches of the Basel II framework in Banks.

This tender is meant for the exclusive purpose of bidding as per the terms &
conditions and scope of consultancy indicated. It shall not be transferred,
reproduced or otherwise used for purposes other than for which it is specifically
issued.

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TABLE OF CONTENTS
Sr. No. Description Page No.
Section 1
Invitation for Tender Offers 5
Section 2
1 Background 7
2 Scope of work 8
A. Workstrem 1: Credit Risk Management & ICAAP 8
Phase 1: Preparation of IRB Implementation 8
Phase 2: Implementation of IRB Approach & ICAAP
Development
10
Phase 3: Achievement of minimum standards for AIRB,
implementation of Basel II software, application to RBI
17
B. Workstream 2: Operational Risk Management
Phase 1: ORM Governance & The Standardized Approach 18
Phase 2: Risk & Control Assessments 20
Phase 3: Loss event management Framework & KRI
Framework
21
Phase 4: Methodology and framework for quantifying
operational Risk under AMA
23
Phase 5: RFP and assistance in vendor selection 24
Phase 6: Internal audit Convergence, new product / process
approval and Use test approaches, application to RBI
24
C. Workstream 3: Market Risk Management
Phase 1: Current State Assessment of existing policies,
Procedures & MIS
25
Phase 2: Prepare the Bank to comply with the qualitative
requirements defined by Basel / RBI for the Internal model
approach
26
Phase 3: Defining the approach and methodology for
addressing the Quantitative Standards required for Internal
Models approach by Basel / RBI
31
Phase 4: Vendor Selection for Market Risk Solution 33
Phase 5: Preparation of Market Risk IMA approach
application to RBI
34
D. Workstream 4: Ongoing assistance in software
implementation & application to RBI
35
E. Workstream 5: Credit Risk Internal rating Model
Development
35
Section 3: Instructions to Bidders (ITB)
1 Eligibility Criteria for Bidders 36
2 Two Bid System Tender 38
3 Non-Transferable Tender 40
4 Terms and Conditions 40
5 Erasures or Alterations 40
6 Cost of Bidding 40
7 Contents of RFP 40
8 Pre-Bid Meeting 41
9 Amendment to RFP 41
10 Language of Bid 42
11 Bid Validity 42
12 Earnest Money Deposit 42
13 Format and Signing of Bid 43
14 Submission of Bid 43
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15 Deadline for submission of Bid 44
16 Late Bid 44
17 Modification and withdrawal of Bid 44
18 Bid Opening 45
19 Clarification of Bid 46
20 Preliminary Examination 46
21 Evaluation of Bids 46
22 Contacting the bank 50
23 Post Qualification 50
24 The Banks Right 50
25 Signing of Contract 50
26 Project Site 51
27 No commitment to accept lowest or any tender 51
Section 4: Terms & Conditions
1 Performance Security 52
2 Time period for completion of assignment and payment
terms
52
3 Delay in adhering to the project timelines 55
4 Indemnity 55
5 Governing Language 55
6 Applicable Law 55
7 Publicity 55
8 Force Majeure 55
9 Bidders Integrity 56
10 Bidders Obligations 56
11 Use of contract document and information 57
12 Contract Amendment 57
13 Project Management 57
14 Termination for Convenience 57
15 Assignment 57
16 Corrupt or Fraudulent practices 58
17 Resolution of Disputes 58
18 Privacy and security Safeguards 58
Annexure 1 Tender Offer Cover letter 59
Annexure 2 Format of Bank Guarantee for Earnest Money Deposit 60
Annexure 3 Bidders Information 61
Annexure 4 Masked Price Bid 63
Annexure 5 Format for furnishing the proposed team profile 64
Annexure 6 Letter of confirmation 65
Annexure 7 Bidders proposed methodology / approach for providing
services to the Bank with respect to the scope of
consultancy work
66
Annexure 8 Credential letter / Reference letter from bank/s 67
Annexure 9 Reference site details 68
Annexure 10 Commercial Bid 69
Annexure 11 Checklist of documents to be submitted 71
Annexure 12 Deed of Indemnity 72
Annexure 13 Performance Security Form 75

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SECTION 1

1. INVITATION FOR TENDER OFFERS:

1.1 BANK OF MAHARASHTRA, hereinafter called The Bank intends to have
Consultancy Services for implementing Advanced Approaches of the Basel II
framework for Credit, Market and Operational Risks in line with the guidelines of RBI &
Banks Policy on Risk Management.

1.2 The Bank invites separate sealed bids, both technical bid and commercial bid, from
eligible bidders for providing consultancy services to all related areas of work for
implementing Advanced Approaches of the Basel II framework for Credit, Market and
Operational Risks.

1.3 A complete set of Request for Proposal (RFP) can be purchased from the following
address during office hours on all working days either in person or by post on
submission of a written application along with a non-refundable fee of Rs.15,000/-
in the form of Demand Draft or Bankers Cheque in favour of Bank of Maharshtra
payable at Pune. The bidders who purchase the RFP in their names only are eligible
for submission of bid.
General Manager
Bank of Maharashtra, Central Office,
Integrated Risk Management Department,
Lokmangal, 1501 Shivaji Nagar,
Pune 411005.

1.1 Complete set of RFP for the above purpose can also be downloaded from Banks
official website www.bankofmaharashtra.in. However, the Bank shall not be held
responsible in any way, for any errors / omissions / mistakes in the downloaded copy.
The bidder is advised to check the contents of the downloaded copy for correctness
against the printed copy of the RFP document. The printed copy of the RFP
document shall be treated as correct and final, in case of any errors in the soft copy.

1.2 The bidder who has downloaded the RFP from the above website, is required to
submit a non-refundable fee of Rs.15,000/- in the form of DD or Bankers cheque, in
favour of Bank of Maharashtra, payable at Pune, 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.

Bid Collection and submission details are as under:

Bid Reference number RFP IRMD/01/2011
Price of tender document Rs. 15000/-
Date of commencement of sale of Bid document 17.02.2011 from 11.00 am
Ernest Money Deposit (EMD) Rs. 10 lakh
Last date of sale of bid document 15.03.2011 up to 2.30 pm
Queries to be mailed by 26.02.2011
Date and time for pre-bid meeting with the bidders 01.03.2011 3.30 pm
Last date and time for receipts of tender offers 15.03.2011up to 2.30 pm
Time and date of Opening of Technical bids 15.03.2011 4.00 pm
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Time and date of Opening of Commercial bids To be notified later
Place of Opening bids and address for
communication
Bank of Maharashtra
Integrated Risk Management
Department, Central Office,
Lokmangal, 1501, Shivaji Nagar,
Pune -411 005
Contact Numbers & E-mail ID Phone: (020) 25536011, 25536268
Fax: (020) 25513122
dgmirm@mahabank.co.in
bomcorisk@mahabank.co.in

1.3 All bids (Technical & Commercial) must be submitted at the same time giving full
particulars in separate sealed envelopes at the banks address within the time
period specified above.

1.4 All bids must be accompanied by Earnest Money Deposit (EMD) as specified in
the RFP document. EMD amount / Bank Guarantee in lieu of the same should not
be mixed with Technical / Commercial bid. It should be in separate cover to be
handed over to the Department in the Bank during office hours at the above
address on or before specified date and time indicated above.

1.5 Technical Bids will be opened in the presence of the bidders representatives,
who choose to attend Technical Bid Opening on the specified date and time.
Technically qualified bids will be taken up for further processing. After technical
evaluation of the bids, the Commercial Bids of qualified bidders will be opened in
the presence of the technically qualified bidders representatives on separate date
and time which will be notified separately.

1.6 No further discussion/interface will be entertained with bidders whose bids have
been technically disqualified.

1.7 Non-attendance at the Bid opening time will not be a cause for disqualification of
a bidder.

1.8 The Bank reserves the right to accept or reject in part or full any or all the offers
without assigning any reasons whatsoever.

General Manager
Bank of Maharashtra

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SECTION 2

1. Background:

Bank of Maharashtra (hereafter referred to as the Bank), is following Basic Indicator
Approach (BIA) for Operational Risk & Standardised Approach for Market & Credit Risk
for the purpose of Capital Adequacy computation as per the guidelines of Reserve Bank
of India. The Bank has a credit risk rating framework for risk rating of various categories
of borrowers. In all, the Bank has 22 risk rating models. The Bank has formulated various
policies to provide necessary guidelines / control measures in the matter of risk
assessment.

The Bank is looking to enhance its risk and capital management capabilities as it
prepares to migrate towards the Advanced Approaches of the Basel II framework for
Credit, Market and Operational Risks. The Bank is looking at enhancement of all the
three pillars of the Basel II framework, viz.:

Pillar 1: Minimum capital requirements as per advanced approaches. Advanced
approaches include Foundation and Advanced Internal Ratings Based Approach
(FIRBA & AIRBA) for Credit Risk, Standardized and Advanced Measurement
Approach (TSA & AMA) for Operational Risk and Internal Models Approach
(IMA) for Market Risk.

Pillar 2: Internal Capital Adequacy Assessment Process (ICAAP)

Pillar 3: Market disclosures

The Bank is looking at assistance in consultancy in the diagnostic and design phases
as well as implementation and program management of selected vendor software
solutions for implementation of Advanced Approaches under Basel II that is Basel II
compliant for the above mentioned areas and in line with the guidelines issued by the
RBI and Banks Policy on Risk Management.

The Bank, a body corporate constituted under the Banking Companies (Acquisition
and Transfer of Undertaking) Act, 1970 and having its Head Office at Lokmangal
1501, Shivaji Nagar, Pune -411005, which term or expression unless excluded by or
repugnant to the context or the meaning thereof, shall be deemed to include its
successors and permitted assigns, intends to issue this bid document, hereinafter
called Request for Proposal or RFP, to have Consultancy Services for implementation
of Advanced Approaches under Basel II Framework as per the scope of
consultancy, terms and conditions defined in this RFP.

This tender is meant for the exclusive purpose of bidding as per the terms & conditions
and consultancy requirement indicated. It shall not be transferred, reproduced or
otherwise used for purposes other than for which it is specifically issued.

The RFP for all intents and purposes is final. However, Bank reserves the right to bring
about any changes in requirements/scopes and the same will be communicated to the
bidders well in advance so as to allow the bidders sufficient time to prepare their
proposal.

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2. SCOPE OF WORK:

SCOPE OF SERVICES UNDER THE RFP

The scope of services would broadly comprise the following four modules:

A. WorkStream 1: Credit Risk Management and ICAAP

Phase 1: Preparation of IRB Implementation

1) Gap Analysis & Data Remediation:

The consultant to conduct a gap study to identify the missing data elements which are
currently not being captured and/or stored in any of current data source systems. The
gap assessment should be done based on Basel II requirements and leading global
practices in credit risk management and suggest methods to bridge the gap.

The consultant should identify the data source systems (such CBS, loan origination
system, recovery system etc.) which contain the data required for implementation of
advanced approaches.

Determine the data required to be captured by the Bank for calculating the Risk
Weighted Assets under IRB approach.

Determine the data required to be captured by the Bank for key Basel II parameters
(PD-LGD-EAD-M) models for various exposures.

Benchmark the data required to be captured by the Bank for the above with the data
required for PD, LGD and EAD-M models.

Identify data gaps and provide a data remediation plan.

Assist the Bank in integrating the data requirement for Credit Risk with the MIS.

Develop and suggest on data collection through existing system.

Develop data collection templates for data elements which are not being captured by
the Bank. Develop and implement a strategy to roll out the data collection templates
across the Bank for timely collection of data.

Comprehensive report to be submitted covering the above scope in whole.

Train the Bank personnel to collect the required data.

Deliverables:

Data remediation report containing findings of data gap analysis and list of missing
data elements required to be captured as per the IRB approaches of Basel II and PD,
LGD and EAD models for all key exposures of the Bank.

Definition of various data elements for Basel II.

Data remediation plan.

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Data collection template for missing data elements.

Roll out the data collection templates across the Bank for timely collection of data.


3-4 Trainings on data collection to the Banks personnel.

2) Rating Model Validation:

Review of the existing rating framework of the Bank for both retail and non-retail
(including agricultural loans) and suggest improvements / modification.

Develop policy for model validation, calibration, and benchmarking the model using
internal data.

Perform qualitative validation of the current rating models to assess the model
design, governance, documentation, and usage of models in business decision
making.

Perform quantitative validation to assess the discriminatory power (in case of
borrower ratings only), calibration and stability of the models.

Provide recommendation on the usability of the current models in Basel II
implementation, need for re-calibration or re-building of models.

The Bank has 19 Corporate models and 3 Retail models that are to be validated and
recalibrated as a part of this exercise.

Deliverables:

Validation Report of existing rating models of the Bank both qualitative and
quantitative.

Model Validation Policy and benchmarking the model using internal data.

User Guide for Quantitative and Qualitative Validation.

Recommendation on the usability of the current models in Basel II implementation,
need for re-calibration or re-building of models.


3) Credit Risk Control Unit (CRCU):

The consultant should assist the Bank in revamping the current credit risk management
department as per the Basel II requirements for a Credit Risk Control Unit.

The consultant should advise on the organization structure, roles & responsibilities
and designation of each human resources of the CRCU.

Provide the skill set specification, required for each of the staff members.
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Identify training requirements for the staff, design training programs and develop the
relevant training material for credit risk advanced approaches.

Develop an Internal Audit (IA) check list for review of rating system and provide
training to the Internal Audit (IA) Department.

Deliverables:

Documented roles and responsibilities of the Credit Risk Control Unit including
staffing and skill set requirements.

IA checklist and training to IA Department.


Phase 2: Implementation of IRB Approach & ICAAP Development

1) Upgradation of Credit Risk related Policies:

Enhance the current credit risk management policy to make it compliant with Basel II,
RBI requirements and IRB approach requirements.

Study the existing policies related to credit risk management (Credit Risk Policy, NPA
& Recovery, Collateral Management, Exposure Policy etc.), benchmark the same with
Basel II guidelines and identify the gaps.

Policy on NPA management covering the following:
i) Methodology for identification and monitoring for NPAs.
ii) Standards to monitor stress assets, restructured assets.
iii) Standards for capturing recovery information.
iv) Methodology to compute best estimate of expected loss.

Policy on Collateral Management should cover the following:
i) Methodology for categorization, valuation of collaterals.
ii) Methodology for collateral mapping to various facilities of a customer.
iii) Monitoring the performance credit risk mitigation techniques.
iv) Usage of collateral in estimation of Risk components under IRB approach.

Develop a policy for credit rating (covering governance, development, usage,
validation, risk parameter estimation aspects of rating models).

Deliverables:

Revised policies related to Credit Risk Management compliant with Basel II, RBI
requirements and IRB approach requirements.

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2) Pillar 2 and ICAAP Development & Implementation:

Review the existing ICAAP framework and risks identified under Pillar and conduct a
gap analysis in view of Basel II and RBI guidelines. Identification of Bank specific
risks and materiality testing framework.

Develop governance structure for the Banks ICAAP and identify the roles and
responsibilities of Risk, Finance teams and senior management.

Study the risk philosophy of the Bank, future growth strategies and stakeholder
expectations to formulate the risk appetite of the Bank for various risks faced.

Define qualitative and quantitative tolerance level for key risks of the Bank to
formulate and frame the risk appetite of the Bank.

Develop standards and framework to integrate ICAAP in the day to day management
and business decisions.

Develop and implement a Stress testing framework. The framework should facilitate
assessing the impact of macroeconomic stress scenarios on the capital position (for
all quantifiable risks) and P& L of the Bank.

Develop and implement measurement techniques for quantifiable risks such as
Concentration risk, Liquidity risk, IRRBB, Business risk, Residual Risk, Counterparty
Credit Risk etc. The latest RBI guidelines on Interest Rate Risk should be taken into
consideration for Liquidity Risk and IRRBB.

Provide risk assessment methodologies non-quantifiable risks like Strategic risk,
Reputation risk etc.

Define capital cushion to cover other risks as per Pillar 2.

All the Pillar 2 aspects should be covered as per Basel II and RBI guidelines.

Report on the process for assessing overall capital adequacy in relation to risk profile.

Formulation of the procedures to be used for evaluating the correlation between
various risks.

Assist in formulation of the ICAAP for the Bank. Ensure compliance with the New
Capital adequacy Framework (NCAF) of RBI and all other related guidelines issued
from time to time including those for Supervisory Review Process (SREP), ICAAP as
well as Market discipline.

Assess requirement of any system / software solution for the purpose of ICAAP.

Training to risk management department on ICAAP and internal audit department on
ICAAP validation.

Deliverables:

Gap analysis report with identification of Bank specific risks and materiality testing
framework.

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Report on study the risk philosophy of the Bank, future growth strategies and
stakeholder expectations to formulate the risk appetite of the Bank for various risks
faced.

Report on qualitative and quantitative tolerance level for key risks of the Bank to
formulate and framing the risk appetite of the Bank and capital cushion to cover other
risks as per Pillar 2.

Models to support quantification of Pillar 2 risks and enhanced stress testing.

Framework to integrate ICAAP in the day to day management and business
decisions.

Frameworks to support management of qualitative risks.

Report on the process for assessing overall capital adequacy in relation to risk profile.

Formulation of the procedures to be used for evaluating the correlation between
various risks.

Assist in formulation of the ICAAP for the Bank. Ensure compliance with the New
Capital adequacy Framework (NCAF) of RBI and all other related guidelines issued
from time to time including those for Supervisory Review Process (SREP), ICAAP as
well as Market Discipline.

Assessment of requirement of any system / software solution for the purpose of
ICAAP.


Development of ICAAP document as on 31
st
March 2011 covering all aspects listed
above.

Training to risk management department on ICAAP and internal audit department on
ICAAP validation.

3) Develop RFP and assist in vendor selection for Basel II Solution for IRB / ICAAP

Deliverables:
RFP document for software required for Credit Risk (including software solution
required for retail pools) under IRB Approach. RFP document for software solution
required for the purpose of ICAAP, if requirement is assessed by the Consultant.

Assistance in vendor evaluation and selection of the software.

Assistance in drafting the contract and terms of the assignment with the software
vendor.

4) Model Development Framework:

Develop standards and operating guides for PD, LGD, EAD model development. The
following aspects should be covered in the standards.

o Governance and controls over the model development process.
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o Process to approve and use a model.

o Guidance on portfolio segmentation to determine the number of rating models
to be developed and allocation of exposures to various rating models.

o Guidelines on data collection for model development, sample creation process
and time weighting of historical data.

o Guidelines on choosing input parameters for the models and determining the
number of rating grades.

o Guidelines on the usage of statistical techniques and expert judgment in
model development and incorporation of conservatism in model development
exercise.

o Guidelines to calibrate PD and LGD to borrower and facility rating grades.

o Standards of model documentation.

Provide user guides and prototypes for model development, detailing the various
statistical techniques of PD, LGD, EAD model development.

Develop LGD and EAD predictor models and stress testing on LGD and EAD.

Provide training to enable the risk management personnel to perform model
development

Deliverables:

Develop standards (covering the above aspects) and operating guides for PD, LGD,
EAD model development.

Provide user guides and prototypes for model development, detailing the various
statistical techniques of PD, LGD, EAD model development.

Document on LGD and EAD predictor models and stress testing on LGD and EAD.

Provide training to enable the risk management personnel to perform model
development.


5) Implementation of IRB approaches and other advancements:

Ensuring compliance to minimum requirements for both FIRB & AIRB approaches.

Map Asset Classes/Subclasses to Approach Type (Standardized /IRB, etc) by a
defined rule as per Basel II/ RBI guidelines.

Furnish guiding principle on credit risk capital computation process.

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Develop the supervisory slotting criteria for specialized lending to map the credit
rating of specialized lending exposures to supervisory slots.

Framework for compliance to securitization requirements as indicated in Basel II and
RBI guidelines as and when Bank undertakes securitization deals.

Review the use of rating for credit sanction and pricing and loan administration.

Suggestions for having Through the Cycle (TTC) rating as per Basel II and IRB
requirements.

Identification of -
Information requirements for the advanced approaches of all risk areas.
Credit risk in Derivatives and other treasury products.
Credit losses at portfolio level: Product wise, Rating wise, Branch wise, Region
wise, Industry wise.
Portfolio loss estimation, correlation analysis, assessing portfolio granularity for
meeting Basel II IRB requirements.

Review the credit risk mitigation framework in the bank.

Provide methodology on
Collateral management detailing the methodology to capture, store, update and
manage collateral information.
Treatment of counterparty credit risk covering the eligible instruments,
methodology to assess various measures of exposure amount, methodology to
identify cross product netting. The consultant has to provide guidance on the
suitable method to compute exposure.

Study on various aspects of credit risk management at portfolio level (sectoral
deployment, group borrower, industry wise exposure caps, etc).

Assistance in implementing the above aspects in the software selected through
including them in the business requirements, coordination with vendors to implement
the methodology in the procured software.

Deliverables:

Suggestions for having Through the Cycle (TTC) rating as per Basel II and IRB
requirements.

Identification of Credit risk in Derivatives and other treasury products.

Identification of Credit losses at portfolio level: Product wise, Rating wise, Branch
wise, Region wise, Industry wise.

Provide guiding principle on credit risk capital computation process. Develop the
supervisory slotting criteria for specialized lending to map the credit rating of
specialized lending exposures to supervisory slots.

Provide methodology on collateral management detailing the methodology to
capture, store, update and manage collateral information.

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Provide methodology and implement for treatment of counterparty credit risk covering
the eligible instruments, methodology to assess various measures of exposure
amount, methodology to identify cross product netting. The consultant has to provide
guidance on the suitable method to compute exposure.

Identify the information requirements for the advanced approaches of all risk areas.


Assistance in implementing the above aspects in the software selected through
including them in the business requirements, coordination with vendors to implement
the methodology in the procured software.

6) Retail Pooling:

The consultant should study the composition of the retail portfolio of the Bank and
develop methodologies to perform retail pooling. The following aspects are to be
covered:

Develop the criteria for retail pooling methods based on statistical factors for cluster
identification.

Develop prototypes for retail pooling and tests to assess homogeneity within a pool
and heterogeneity across pools to distinguish default behaviour.

Pool / group the retail exposures of the Bank to various asset classes as prescribed
Basel II, IRB approach, based on statistical methods.

Develop reporting templates to monitor pool stability and migration.

Develop methods to capture required data to compute PD, LGD and EAD for each
retail pool.

Assistance in implementing the developed models in the credit risk software.

Deliverables:
Policy on rating of retail assets and data maintenance.

Retail pooling policy and supporting prototypes for retail pooling.

Pools of retail exposures in the existing portfolio.

Methods to capture required data to compute PD, LGD and EAD for each retail pool.

Reporting templates to monitor the retail pools.


Assistance in implementing the developed models in the credit risk software.

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7) Reporting Framework:

Assist the Bank in developing a policy for Pillar 3 disclosures and rating based MIS.
The policy should provide guidelines on the reporting templates, governance of
reporting process and controls over the reporting process.

Implement the Pillar 3 disclosures and rating based MIS by identifying the various
source systems, developing reporting formats as per the regulatory and business
needs.

Develop templates for reports and dashboards to perform portfolio monitoring across
industries, geographies, product types etc.

Detailed risk reporting templates to be developed to assist the senior management in
decision making.

Develop methodology for industry risk analysis, industry exposure limit setting,
concentration monitoring.

Reports to monitor credit migrations and trends in credit quality.

Reports for identification and continuous monitoring of rehabilitation and recovery
process of NPA accounts.

Portfolio analytics covering asset classes, products and rating grades.

Standards for issuing region specific, industry specific advisories and notes to all
branches.

Develop reporting templates to monitor Basel II collaterals (Commercial Real Estate,
Residential Real Estate, Receivables etc.)

Assist the Bank in implementing these reporting templates in its IT systems to ensure
real time monitoring.

Develop reports for identifying and measuring of risk factors for assessing the
effectiveness and impact of Credit Risk Migration Techniques.

Develop reporting templates for early warning signals on credit quality deterioration.

Deliverables:

Disclosure Policy as per Pillar 3 requirements of Basel II that includes reporting
formats.

Portfolio monitoring reports and dashboards covering all the reporting requirements
mentioned in the above scope.


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8) Trainings:

Conduct training to the relevant personnel in the risk management department on the
all frameworks which the Consultant has developed/ implemented.

Provide training to senior management on ICAAP, rating systems and how to use the
risk MIS in decision making.

Conduct training for the Internal audit department to perform ongoing audit of rating
systems.

Develop training manuals for new joinees in risk management department.

Deliverables:

1 workshop each for senior management.

Comprehensive training programmes for risk management and Internal Audit for
knowledge transfer for each of the scope items of Phase 1 & 2 and development of
training manuals for new joinees in risk management department.

Phase 3: Achievement of minimum standards for AIRB, implementation of Basel II
software, application to RBI

1) Enhancement of rating systems for Advanced IRB approach:

Develop LGD models for the corporate, sovereign and bank exposures. The models
should cover both defaulted and non-defaulted exposures.

Develop EAD models for corporate, sovereign and bank exposures.

Develop methodology for computing Effective Maturity.

Deliverables:

Prototype LGD, EAD and Effective Maturity (M) models for Corporate and Retail
portfolios.

Assistance in implementing of the above models in the credit risk software.

2) Advanced ICAAP Development & Implementation:

Develop a risk based pricing framework containing:

Methodology to estimate hurdle rate for individual business units.

Mechanism to allocate costs to a new transaction and assess the marginal capital
requirement for a new transaction.

Methodology to compute RAROC and SVA on an ex-ante basis and price a new
loan

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A methodology to assess risk adjusted performance of business lines, regions,
product types based on the credit ratings to be developed and implemented.

A methodology to compute the risk adjusted return earned from individual
relationship (each account wise) to be developed and implemented.

Deliverables:

Identify data elements to be captured for RAROC, Risk Based pricing and suggest
data remediation.

Framework documents for implementation of (for Corporate & Retail Portfolio at a
pool):
i. Risk based pricing
ii. RAROC and SVA on an ex-ante basis and price a new loan

Identify data elements to be captured for RAROC, Risk Based pricing and suggest
data remediation.


Assistance in the implementing the risk adjusted performance measurement and risk
based pricing in the software.

3) Preparation of Credit Risk IRB (FIRB & AIRB) Approach Application for RBI:

Deliverables:
Assistance in developing the application to RBI to migrate to IRB (FIRB & AIRB)
approach of credit risk.

B. Workstream 2: Operational Risk Management (ORM)

Phase 1: ORM Governance & The Standardized Approach

1) Gap Analysis & ORM Governance:

Conduct a gap analysis of the existing OR management vis--vis desired level of
Operational Risk (OR) management.

Developing risk reporting system and strategies to identify, measure and control /
mitigate OR.

Advising on risk governance architecture suitable to the organizational structure of
the bank as a whole and for each business unit and detail roles and responsibilities at
each level.

Developing an OR Management strategy and objectives for the Bank.

Re-defining the roles and responsibilities and accountability of the risk management
committees and authorities, with regard to OR Management.

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The roles and responsibilities of the independent bank wide OR Management
function and line of business management.

A description of the internally derived analytical framework that quantifies the
operational risk exposure of the Bank.

Defining qualitative and quantitative factors and risk mitigants and incorporate them
into the OR Framework.

A discussion and documentation of the testing and verification processes and
procedures.

Regular reporting of critical risk issues facing the banks and its control/mitigations to
senior management and Board.

Provisions for review, treatment, and resolution of non-compliance issues.

System for validating/reviewing the OR Management processes and assessment.

Methodology for risk reporting covering OR exposures, material OR losses, material
near-misses to the Board, Management and risk analysis.

Review of existing ORM Policy for making the same compliant to the Basel II and
regulatory requirements.

Deliverables:

Gap analysis report of the existing OR management vis--vis desired level of OR
management.

Risk reporting system and strategies to identify, measure and control / mitigate OR.

the bank as a whole and for each business unit.

Develop an OR Management strategy and objectives for the Bank.

Document on description of the internally derived analytical framework that quantifies
the operational risk exposure of the Bank, defining qualitative and quantitative factors
and risk mitigants, testing and verification processes and procedures.

Reporting mechanism of critical risk issues facing the banks and its
control/mitigations to senior management and Board.

Documented methodology for risk reporting covering OR exposures, material OR
losses, material near-misses to the Board, Management and risk analysis throughout
the Bank.

Revision in ORM Policy to make it compliant to the Basel II and regulatory
requirements.

20

2) The Standardized Approach (TSA)

Identification of business lines with reference to the Bank and methodology to meet
qualifying criteria as per TSA.

Mapping of Income / Expenditure heads in business lines as per Basel II and RBI
guidelines on TSA.

Develop a framework for capital computation as per The Standardized Approach
(TSA) and provide an approach to arrive at gross income across Basel business
lines.

Oversee and project manage the implementation of The Standardized Approach
(TSA).

Assistance in developing the application to RBI to migrate to TSA approach of operational
risk.

Deliverables:

Framework for capital computation as per Standardized Approach of Basel II.

Assistance to the Bank in performing the capital computation under TSA.


One training on TSA methodology for personnel of Risk Management Dept at Central
Office.

Assistance in developing the application to RBI to migrate to TSA approach of operational
risk.

Phase 2: Risk & Control Assessments

1) Risk & Control Self Assessments (RCSA):

RCSA shall include but not limited to:

Develop criteria to assess risk and control, identification of alternate approaches
available, selection of a suitable approach or combination of approaches, on the
basis of size, structure and business mix of the Bank and by analyzing cost benefit
analysis of various approaches. The scope of the exercise and the areas/units to be
covered and the priority of identification. Advising on the process of risk identification.

Develop methodology policy for conducting risk and control assessment and the roll
out plan across various units. The methodology should include setting up of rating
scales for risks and controls and evaluation of residual risks.

Suggesting templates to measure OR in terms of financial impact and likelihood of
occurrence, achievement of objectives etc. and its level and direction.

21
Conduct RCSA for all key business and processes (including Branches) across the
Bank. The key businesses should include but not be limited to: Treasury, Retail
Banking (liabilities, assets and cards), Trade Finance and Corporate Banking,
Rural/priority sector lending, Information Technology and International Banking.

Methodology to analyze the results and evaluation methods and criteria of controls.

Method of setting priority of risks/control and its application.

MIS templates for monitoring and analyzing the RCSA results.

Structure training and assessment workshops.

Conduct training sessions for RCSA (including methodology of risk and control
identification, assessment and rating) at locations as mentioned in this scope.

Integrating risk assessment exercise with internal and risk based audit to avail
maximum benefit of it.

Deliverables:

RCSA Policy and Methodology.

RCSA Implementation across all the key businesses of the Bank.

Methodology for RCSA roll-out and aggregation of results.

MIS templates for reporting RCSA results on an aggregated basis.


1 training to Risk management department and 4-6 workshops for business units.

Phase 3: Loss event management Framework & KRI Framework

1) Loss event management framework:

Development of loss data management framework and policy for capturing loss data
(including objective loss classification criteria).

Template for capturing the OR incidents, OR loss, potential loss and near-miss
events in day to day management.

Develop methodology for avoiding double counting of operational risk losses and
reconciliation of these losses with those in books of accounts / General Ledger.

Designing MIS for capturing the loss, potential loss and near- miss events.

Develop methodology to identify loss events to classify the events to a risk type e.g.
Credit / Market Risk.

Develop process to capture non financial loss.

22
Develop mechanism to follow up and update loss event until the event is closed.

Develop methodology for mapping/classification of Banks loss events to different
business lines and loss event types.

Develop methodology for integration of external data with internal data and methods
for scaling external data with internal data.

Root cause analysis of all losses captured and other MIS templates for Operational
Loss reporting.

Conduct training sessions on the methodology of loss data identification, capturing,
analyzing and classification as mentioned in this scope.

Deliverables:

Loss event management Policy.

Template for Loss data collection.

Methodology for avoiding double counting of operational risk losses and
reconciliation of these losses with those in books of accounts / General Ledger.

Design MIS for capturing the loss, potential loss and near- miss events.

Methodology to identify loss events to classify the events to a risk type e.g. Credit /
Market Risk.

Methodology for integration of external data with internal data and methods for
scaling external data with internal data.


1 training to Risk management department and 4-6 workshops for business units.

2) KRI framework:

Identification of KRI and developing a framework for purpose and usage of KRI,
setting thresholds for KRI, frequency of reporting, frequency of KRI data collection
etc.

Develop KRIs for key risks for all key business and processes (refer RCSA section
for key business areas) across the Bank, including capture of source system and
calculation methodology.

Develop KRI monitoring process (including KRI data collection).

Develop KRI monitoring and validation process and methodology to ensure
effectiveness of KRI in measuring risk level.

MIS templates for management reporting.

23
Develop a risk dashboard providing periodic snapshot of a top down assessment of
key risks, mitigation plans and effectiveness of controls.

Develop methods on scaling KRI with that of Industry trends.

Conduct training sessions on KRI identification and monitoring methodology including
calibration of thresholds for key risk indicators as mentioned in the scope.

Deliverables:

KRI Policy covering the above.

MIS template for KRI reporting and aggregation.

Methodology document for identifying KRIs.

Identification of KRIs for all key risks identified during the RCSA exercise including
data elements and related calculations.


1 training to Risk management department and 4-6 workshops for business units

Phase 4: Methodology and framework for quantifying operational risk under AMA:

Setting up qualitative and quantitative standards (AMA soundness standards) as per
Basel II and RBI guidelines.

Develop methodology for recognizing insurance under the AMA, which will require
capturing elements through appropriate discounts or haircuts in the amounts of
insurance recognition.

Develop statistical methodologies including the capture and use of internal and
external operational risk loss data including data potential events (including the use
of Scenario Analysis).

Build framework for quantifying operational risk under AMA and perform capital
computation (including stress testing) for key business areas.

Methodology for integration of external loss data with internal loss database.

The development and incorporation of business environment and internal control
factor assessments into the OR Framework.

Use of scenario analysis, internal loss data, BE&ICF and External loss data for
quantification.

Data collection templates and road map for operational risk modeling under AMA.

Perform Capital computation including stress testing for key business areas refer
RCSA section for key business areas) of the Bank.

24
Deliverables:

Framework for quantification of capital under Advanced Measurement Approach of
Basel II.

Setting up qualitative and quantitative standards (AMA soundness standards) as per
Basel II and RBI guidelines.

Methodology for recognizing insurance under the AMA.

Statistical methodologies including the capture and use of internal and external
operational risk loss data including data potential events (including the use of
Scenario Analysis).

Prototype for computation under AMA approach.

Capital computation including stress testing for key business areas.


1 Trainings to the Banks Risk Management department on AMA approach

Phase 5: RFP and assistance in vendor selection

Deliverables:

RFP for OR modules including AMA and risk reporting.

Assistance in vendor evaluation and selection of the software.

Phase 6: Internal Audit Convergence, new product/process approval and Use test
approaches, application to RBI

1. Methodology for assessing Operational Risk (OR) in new product / process
Approval

Deliverables:

Framework document for assessing Operational Risk (OR) in new product /
processes

2. Framework for leveraging existing risk based audit in ORM and integration of
ORM and audit

Deliverables:

Framework document for integration of ORM with Internal Audit.
One training programme for Audit and Inspection professionals on integration of
ORM and audit.

25
3. Framework for embedding Risk Management in the day-to-day operations of
the Bank (map ORM to performance measurement system) and approach on
use tests.

Deliverables:

Use test framework for ORM.

Suggesting techniques for creating incentives to improve the management of OR
throughout the Bank.

One General Awareness Training Programme for Senior Management

4. Preparation of Operational Risk AMA approach Application to RBI

Deliverables:
Assistance in developing the application to RBI to migrate to AMA approach of
operational risk.

C. Workstream 3: Market Risk Management

Phase 1 Current State Assessment of existing Policies, Procedures and MIS

1) Current state analysis to identify compliance to Basel-II advanced approach and
RBI and identify areas of improvement/enhancements:

Conduct a Diagnostic Study and prepare a Gap Analysis Report, covering the
existing governance structure, policies, procedures, and systems.

Identify the gaps in the existing system and assess the readiness of the Bank
towards regulatory compliance.

Assess incremental approach and develop a Road Map to transition from Current
market risk management approach to Internal Model Approach.

Gap Analysis Report should include alternate approaches addressing the identified
gaps and recommendations covering Market Risk Management goals, process
description, assessment methods, and any escalation framework.

Prepare and discuss a detailed report with the Bank, covering all findings along with
a detailed project plan and implementation road map by the end of this phase.

Deliverables:

Report on findings and recommendations for enhancement of Market Risk
Management framework as per Internal Model Approach of Basel II and guidelines
released by RBI.


26

Phase 2 Prepare the Bank to comply with the qualitative requirements defined by
Basel / RBI for the Internal Model Approach:

Assess the market risk management standards at the Bank and benchmark them with the
regulatory standards and leading industry practices. The following items should be covered:

1) Study the risk governance framework at the Bank and suggest improvements for
effective and efficient risk management:

the Bank as a whole and for each business unit.

It should cover all aspects of Market Risk management as per guidelines of RBI and
specifically the following aspects of Market Risk Governance Framework.
Organization structure
Risk control unit
Re-defining the roles and responsibilities and accountability of the risk
management committees and authorities, with regard to Market Risk
Management.
Roles and responsibilities of the risk management committees, units and
personnel at different levels including senior management

Deliverables:
Risk governance architecture covering all aspects of Market Risk management as per
RBI guidelines.


2) Development/enhancement of market risk policy and framework and its related
procedures:

Assist the Bank in designing new market risk related policies, if needed, after a
detailed study of the existing policies, and its relevance in a Basel II environment.
Identify gaps / enhancements so as to align them with the regulatory expectations. It
should cover at least the following policies:

a) Market Risk and ALM Policy;
b) Valuation, Investment and Reserving policies;
c) Risk Appetite document and Limit Structures / Frameworks;
d) IT Security Policy and Procedures.

Develop a Market Risk Management strategy and objectives for the Bank.

Suggest qualitative factors and risk mitigants and how they can be incorporated into
the Market Risk Framework.

Comment upon the adequacy of the following:

i) Regular reporting of critical risk issues facing the bank and its
control/mitigations to senior management and Board.
ii) Provisions for review, treatment, and resolution of non-compliance issues.
iii) System for validating/reviewing the Market Risk Management processes and
assessment.
27

Methodologies for risk reporting covering Market Risk exposures, limit breaches, risk
Management and risk analysis.

Suggest techniques for creating incentives to improve the management of Market
Risk throughout the Bank.

Define policy requirements for qualitative and quantitative disclosures.

Deliverables:

Enhancement in market risk policy with coverage of quantitative and qualitative
aspects of market risk and compliance with RBI and Basel II guidelines on IMA for
market risk.

Methodologies for risk reporting covering Market Risk exposures, limit breaches, risk
Management and risk analysis.

Techniques for creating incentives to improve the management of Market Risk
throughout the Bank.


3) Define framework for identification of risks related to market risk in the trading
book of the Bank as per RBI guidelines:

Develop framework for capturing interest rate risk (specific and general), equity price
risk (specific and general), exchange risk and other risks as per RBI guidelines.

Define the Market Risk factors involved in Banks Trading Book, and design
templates to capture these factors. Factors like Re-pricing Risk, Yield Curve Risk,
Basis Risk, and Embedded Options Risk should be covered in this process (Both on
balance sheet items and off balance sheet items should be covered).

Assist the Bank in segregating the trading book positions into the different categories
like Interest Rate risk, Equity position risk, Foreign Exchange risk, Commodities risk
(as applicable to Indian banking scenario).

Cover the second order risk factors like skew adjustment in case of option portfolio
and correlated risk factors.

Systems and procedure for monitoring RBI guidelines and various risks under
derivative / of balance sheet items.

Market Risk in Banking Book:

Liquidity Risk:

Conduct behavioral studies on distribution on assets and liabilities for bucketing
purpose for preparation of statement of structural liquidity.

Conduct back testing and stress testing for liquidity risk.

28
Develop methodology for future estimation of inflows and outflows for preparation of
Statement of Short Term Dynamic Liquidity and back testing of the statement
prepared.

Review the present system of contingency funding plan.

Interest Rate Risk:

Conduct behavioral studies on distribution on assets and liabilities for bucketing
purpose for preparation of statement of interest rate sensitivity.

Estimation of Rate Sensitive Assets (RSA) and Rate Sensitive Liabilities (RSL).

Back testing and Stress testing for interest rate risk.

Computation of duration of assets and liabilities, assessment of duration of equity,
setting limits for duration of assets and liabilities.

Deliverables:

Develop framework for capturing interest rate risk (specific and general), equity price
risk (specific and general), exchange risk and other risks as per RBI guidelines.

Assist the Bank in segregating the trading book positions into the different categories
like Interest Rate risk, Equity position risk, Foreign Exchange risk, Commodities risk
(as applicable to Indian banking scenario).

Conduct behavioural studies on distribution on assets and liabilities for liquidity and
interest rate risk.

Enhance the methodology for preparing Short term dynamic Liquidity statement.

Computation of duration of assets and liabilities, assessment of duration of equity,
setting limits for duration of assets and liabilities.

4) Defining and developing model validation standards and change management
framework:

Define Model validation standards for periodic as well as on-going validation. It
should include at the minimum
i. Procedures for validation of MTM as well as VaR models
ii. Frequency of periodic validation and trigger point for on-going validation.
iii. Responsibility matrix and scope of the validation exercise
iv. Documentation requirement for model validation

Define criteria for Regular review of the performance of vendor based models.

Define criteria for introduction of new products.

Establish a change management framework for methodologies, processes and
system. It should include
i. Change in the methodologies of MTM or VaR calculation
ii. Change in source or type of input data
iii. Changes in processes and procedures related to market risk
management, capital calculation.
29
iv. Change in software systems
v. Impact analysis of the changes
vi. Internal approval process related to change management.

Deliverables:

Define Model validation standards for periodic as well as on-going validation.

Define criteria for Regular review of the performance of vendor based models.

Define criteria for introduction of new products.

Establish a change management framework for methodologies, processes and
system.


5) Review of the existing software systems related to market risk management and
suggests the improvements required in order for them to be of the standards
defined by Basel II / RBI **:

Review the IT systems involved in the market risk management process;

Review the various data feeds required in market risk management process including
external market data as well as internal data transfer like updation of position data.

Review of the controls built by the Bank to maintain sanctity of the market data fed
into the Risk Analytic Engine.

Consultant should assist the Bank in designing the database requirements for
collecting historical data required for VaR computation.

Review the IT control environment and assess the suitability of the same in line with
the regulatory requirements.

Review the model validation documentation / UAT documents prepared by the Bank
at the time of system implementation and suggest enhancements.

** This part of the review should be performed post the implementation of the selected
market risk system.

Deliverables:

Review the IT control environment and assess the suitability of the same in line with
the regulatory requirements.

Assist the Bank in designing the database requirements for collecting historical data
required for VaR computation.

Review the model validation documentation / UAT documents prepared by the Bank
at the time of system implementation and suggest enhancements.


30

6) Development of MIS framework for market risk reporting and disclosure
requirements to the regulators :

Define MIS framework for compliance with capital adequacy norms related to Market
Risk.

Design reporting templates as required for Internal Models for the regulator (RBI) as
well as the Banks Senior Management and the Board.

Preparations of the general qualitative disclosure requirements for Market Risk
including the portfolios covered by IMA.

Assessment of the Internal control environment relating to Market risk
management function and suggesting improvements:

Review the procedures around monitoring and ensuring that the market risk
management activities are compliant with the policies.

Assess the adequacy of the controls pertaining to
a) The usage of market risk models,
b) Authorization and escalation matrices (in times of breaches) and
c) Access rights from a risk and regulatory viewpoint.

Assist in institutionalizing a governance framework for the model validation process
(Market risk as well as the valuation models).

Compliance framework for all types of derivative products as regards regulations and
market best practices.

Assist the Bank in assessing the internal controls for market risk management and
ensuring compliance with internal policies and RBI guidelines.

Deliverables:

A report covering the following areas:

o Improvements in Banks existing risk governance framework.

o Enhancements required in the available policies, documents or templates for
any additional policies / documents required from regulatory perspective.

o Findings related to internal control environment and improvements for the
same.

o Findings and recommendations related to IT systems and Data reliability.

Framework for mapping the Banks trading portfolio with various risk factors.

Model validation and change management framework.

MIS framework and report templates to satisfy regulatory disclosure requirements.


31

Phase 3 Defining the approach and methodology for addressing the Quantitative
Standards required for Internal Models approach by Basel/RBI:

1) Review of existing mark to market valuation and VaR methodologies and
suggesting improvements / enhancements:

Validation of Mark to Market methodology for the Banks trading book including all the
asset classes (Equity, Fixed Income and Forex) and Derivatives.

Validation of calculation methodology of various risk factors such as PV01 for interest
rate risk, Greeks for option portfolio, Duration and convexity for fixed income
instruments.

Framework & Validation [Simulation-based & Scenario Analysis] Methodology for
Value-at-Risk Model.

Suggest the appropriate methodology in case the existing methodologies are
insufficient or inappropriate.

Articulate the methodologies for compliance with the Prudent Valuation Guidance
for positions held in the Trading Book.

Assist the Bank in deciding parameters for limit setting process.

2) Back Testing Framework:

Comprehensive Back testing and exception handling policies and procedure for the
Value-at-Risk Models

o Define Back Testing procedures;
o Develop an evaluation procedure of Back Testing results.
o Prepare MIS and other reporting formats required to communicate the Back-
testing results to the Senior Management and the regulators on a periodic
basis.

Deliverables:

Comprehensive back testing and exception handling policies and procedure for the
Value-at-Risk Models.

Validation results of the valuation and VaR models.

Findings and recommendations related to back testing.


3) Stress Testing Framework:

Review the process of classification of traded instruments into standardized
instrument classes and identification of stress parameters associated with different
instrument classes.

Establish a process of determination of Stress scenarios based on underlying stress
parameters.
32

Generation of scenarios based on analysis of historical data for the defined stress
parameters and simulated scenarios based on macroeconomic parameters;

Deliverables:

Enhance / build stress testing policy.

Findings and recommendation related to back testing and stress testing framework.


4) Review Aggregation and capital computation methodologies:

Define Aggregation Methodology for Capital computation.
Define the products to be covered under IMA.
Define the products / risk factors to be covered using standardized approach
and document the reasoning for the same.
Define the methodology to be adopted for calculation of Stress VaR.

Review the netting and correlation benefits availed during VaR calculation.

Prepare detailed road map for the smooth transition from standardized approach
towards Internal Model Approach (IMA).

Deliverables:

Define Aggregation Methodology for Capital computation.

Prepare detailed road map for the smooth transition from standardized approach
towards Internal Model Approach (IMA).

Final capital computation (aggregation of Market Risk capital using both the
Standardized Approach as well as the Advanced Approach).


5) Trainings on Risk identification, risk measurements and risk management
functionalities to the Banks personnel:

Consultant should conduct workshops including the following areas at the minimum;
Calculation of various risk factors such as PV01, duration, option Greeks
VaR calculation techniques
Data requirement and collection of data
Back testing procedures
Stress Testing framework and procedures
MTM valuation models and process

Deliverables:

A report covering the following areas:
Validation results of the valuation and VaR models.
Findings and recommendation related to back testing and stress testing
framework
33
Training workshop to cover valuation models, VaR models, back testing and stress
testing frameworks and data requirements.

Phase 4 Vendor Selection for Market Risk Solution

Consultant will be expected to help in preparing the RFP for vendor selection for Market Risk
Solution, the vendor evaluation process to procure a suitable market risk management
software solution.

1) Defining functional and technical specifications for market risk system:

Develop Functional & Technical specifications for Market Risk system. A broad
requirement is supplied as part of this document but the consultant will be
responsible for elaborating those specifications to the vendors and handle their
queries. The Market risk system should be able to handle at least the following
requirements:

i. System integration:

The risk system should be able to integrate with other systems such as front office
system for deal capturing and back office system.

ii. Product coverage:

Have the capability to handle instruments currently in the books of the Bank as well
as future instruments envisaged by the Bank.

iii. Market Data Capture:

Ability to capture the market data required from the sources directly.
Have inbuilt procedures to identify and handle the issues related to erroneous data.
Facility of archival of historical market data should be provided.

iv. MTM valuation functionality:

Ability to cover all the products in the Banks portfolio across the asset classes.
Ability to capture the EOD prices of the traded securities.
Ability to calculate various risk factors associated with the risks observed in the
Banks trading portfolio. For equity risk factors such Beta and for interest rate risk
factors such as PV01, Modified Duration and Convexity should be calculated.

v. VaR computation functionality:

Facility to define appropriate VaR parameters such as
i) Frequency of Calculation & Confidence Interval
ii) Holding Period
iii) Observation period
iv) Data series
Facility to calculate VaR using all the three approaches
v) Historical simulation
vi) Variance Covariance
vii) Monte-Carlo simulation
Facility to calculate VaR as of historical dates as well
34

vi. Stress Testing:

Ability to perform stress testing for user defined scenarios as well as system
generated scenarios.
Ability to generate scenarios from Historical data as well as macro - economic factor
based data.
Ability to calculate stress VaR number.

vii. Back Testing:

The system should be able to perform back testing of the VaR models for a defined
time period at any given date.
It should have the facility to perform Back-Testing using System generated VaR
numbers and system generated clean actual P&L numbers as well as clean
hypothetical P&L number.
The system should be able to generate exception report in the required regulatory
format.

viii. Reporting Functionality:

Adequacy of the reporting functionality in line with the Banks internal as well as
regulatory Market Risk reporting requirements should be ensured.

2) Preparation of RFP for vendor selection for Market Risk Solution, vendor
evaluation on the basis of pre-defined criteria:

Design the use cases to be provided to the vendors for proof of concept.
Evaluate the results submitted by the vendors as a response to the proof of concept
requirements.
Rate the different vendors on different requirements based on the pre-defined
assessment criteria and results of proof of concepts.

Deliverables for Phase 4:

A document containing the technical and functional specifications for market risk
solution.
Use cases to be used for proof of concept.
A report containing comparative analysis of various vendors on the defined criteria
and results of proof of concept testing.

Phase 5: Preparation of Market Risk IMA approach Application for RBI

Deliverables:
Assistance in developing the application to RBI to migrate to IMA approach of market
risk.

35

D. WorkStream 4: Ongoing Assistance in software implementation & application to RBI

Program management of Basel II solution implementation for credit, market &
operational risk management:

Setting up of program management office including escalation matrix.
Co-develop Project plan and implementation schedule
Regular updates by way of presentations to
Steering Committee
Change management committee
Project monitoring committee

Develop Business Requirements Document for
i. Credit Risk IRB Implementation
ii. Market Risk IMA Implementation
iii. Operational Risk AMA implementation

Review of Software Requirement Specifications (SRS) developed by vendor and provide
areas of improvement.
Help the Bank in constructing test scenarios for functional testing of all the softwares.
User Acceptance Testing.
Help the Bank in carrying out hardware acceptance testing.
Report on test results and level of compliance of the implemented software

Deliverables:
Project management of software solution implementation.
Assistance in the UAT of the Software.
Presenting periodic updates to the Senior Management.
Coordinate the implementation with the Bank and the Software vendor.

E. Workstream 5: Credit Risk Internal Rating Model Development:

Determine the optimum number of borrower & facility rating models required by the Bank
for corporate portfolio by performing a portfolio analysis.

Determine the optimum number of application scorecards required by the Bank for retail
portfolio.

Re-calibrate the existing rating models/ scorecards to suit the requirement or build new
rating models/scorecards (if required).

Deliverables:
Internal rating models for corporate portfolio.
Application scorecards for retail portfolio.
Methodology for back testing of rating models / scorecards.

The consultant need not include Workstream 5 in the overall project cost. Rather the
consultant is expected to provide a man-month rate and man-month required, which
would be applicable for this workstream.

36

SECTION 3

INSTRUCTIONS TO BIDDERS (ITB)

1. ELIGIBILITY CRITERIA FOR BIDDER (revised as per HLC direction)

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. If circumstances warrant, the Bank
reserves the right however, to make suitable amendments to these mandatory
eligibility criteria

Sr.
No.
Eligibility Criteria Documents to be enclosed
1 Should be either a Government Organization/
PSU /PSE / registered partnership firm or a
limited company under Indian Laws or / and an
autonomous Institution approved by GOI /RBI
promoted.

Reference of Act / Notification ,
Registration Certificate, etc.
2 Should have been in the business of risk
management consulting in India at least for
three years as on 31.03.2010 (in case of
mergers / acquisition / restructuring or name
change, the date of establishment of earlier /
original partnership firm / limited company can
be taken into consideration).

Supported by information on
consulting business in India,
viz., Copy of Audited Annual
report, Certificate of
commencement of business,
Assignment/Order letters, client
references or any other proof.
3 Should have a minimum average turnover of at
least Rs. 10 crore per annum in the past three
financial years for its Indian operations and
should have made profits for the past 3 years
in succession from its Indian operations (not
applicable for non-profit making organization).

Copies of last three financial
years relevant audited balance
sheets and profit & loss
statements.
4 Should have never been blacklisted / barred /
disqualified by any regulator / statutory body.

Self-declaration.
5 The applicant should not be a software vendor
or solution provider.

Self-declaration.
6 Should have been assigned / undertaken
consultancy for at least 1 PSU bank for
implementation of Basel II guidelines for
Advanced Approaches for Credit Risk, Market
Risk and Operational Risk.
Appropriate documentary
evidence.
7 Should have resources who have worked on
similar engagement of providing consultancy
services for Basel II, Credit, Operational and
Market risk management, developing RFP,
vendor evaluation and selection, defining the
functional requirements, project management
of implementation and UAT. All resources to
be deployed for the project should have had
Confirmation from the Vendor
and profile of team members.
37
similar experience in at least one public sector
bank in India.

The Engagement Manager proposed should
have been with the firm for a minimum of three
years with the firm.

38

2. TWO BID SYSTEM TENDER:

2.1 Technical bid & Commercial bids must be submitted at the same time in separate sealed
envelopes, giving full particulars at the Banks address given below, on or before the
schedule given in Section 1. All envelopes should be securely sealed and stamped.

Banks address
General Manager
Bank of Maharashtra
Central Office, Lokmangal,
1501, Shivaji Nagar,
Pune -411 005

2.2 All the envelopes must be super-scribed with the following information:

Type of bid (Technical or Commercial)
Tender Reference Number
Due Date
Name of Bidder
Name of Authorized Representative

2.3 The bidder has also to submit a soft copy of the complete technical bid in Open Office
format on a CD super-scribing Soft Copy of Technical Bid against Tender Reference
Number along with the technical bid. The bidder is not required to furnish the soft
copy of the commercial bid.

2.4 While submitting the bid, the bidder should ensure that papers are submitted properly,
duly typed or printed and neatly filed and bounded with page numbers. All schedules,
formats and annexures should be stamped and signed by the authorized official of the
bidders company.

2.5 The bid not submitted in the prescribed format or incomplete in any respect is liable for
rejection. The Bank is not responsible for non receipt of bid within the specified date and
time due to any reason including postal delays or Holidays.

2.6 ENVELOPE- I (TECHNICAL BID):

2.6.1 The technical bid will be evaluated for technical suitability as well as for other terms
and conditions.
2.6.2 All the formats need to be filled in exactly as per the pro-forma given in the
Annexures and any deviation is likely to cause rejection of the bid.
2.6.3 The Bank shall not allow / permit changes in the technical specifications once it is
submitted.
2.6.4 The offer may not be evaluated by the Bank in case of non-adherence to the format
or partial submission of technical details as per the format given in the RFP.
2.6.5 Non-submission or partial submission of the information along with the offer could
result in disqualification of the bid of the concerned bidder.
2.6.6 The Technical Bid must not contain any price information.

39

2.6.7 The Technical Bid shall comprise of -
i) Tender Offer Cover Letter (Annexure-1) in Companys letter head duly signed
by authorized signatory with name, title and seal (Copy of Power of attorney
to be submitted).

ii) Table of Contents (List of documents enclosed).

iii) Earnest Money Deposit / Bank Guarantee in lieu of the same (Annexure- 2) -
It should be in separate cover to be handed over to the Department in the
Bank.

iv) Bidder Firms Profile along with documentary evidence of services offered to
other banks and all relevant enclosures as detailed in (Annexure-3).

v) Masked Price bid (Annexure- 4).

vi) Proposed team profile (Annexure- 5).

vii) Duly signed authority letter by the competent authority of the firm, authorizing
the executant to sign the bid on behalf of the firm.

viii) Letter of Confirmation (Annexure-6).

ix) Bidders proposed methodology/approach for providing services to the bank
with respect to the scope of consultancy work (Annexure-7).

x) Credential letter / Reference letter from bank/s along with signed copies of
Scope of Work agreed by the bidder with their clients as proof of work
Annexure- 8).

xi) Reference Site Details (Annexure-9).

xii) Balance sheet of last three financial years.

xiii) A true copy of Registration certificate & list of offices in India (For Company).

xiv) Other documents / information as requested in this RFP.

xv) Any additional information including assumptions that the Consultant team
may think fit but not included elsewhere in the proposal, which will help the
bank to assess the capabilities of the consultant.

xvi) Checklist of documents (Annexure-11).

2.6.8 The bidder will also submit copy of the RFP duly stamped and signed on each page
by the authorized official of the bidders company.

40

2.7 ENVELOPE-II (COMMERCIAL OFFER)
2.7.1 The suggested format for submission of Commercial bid is as follows:
i. Covering Letter in Companys letter head duly signed by authorized signatory
with name, title and seal.
ii. The Professional Fees / Price for the Consultancy Services for the Scope of
services defined in this RFP. To be submitted as per Commercial bid format.
(Annexure-10).
2.7.2 Price must be quoted in Indian Rupees only.
2.7.3 The price must include all costs, taxes and levies excluding Service Tax.
The Service tax shall also include applicable surcharge/cess on service tax, if
any. No price variation other than Service Tax will be permitted.
2.7.4 The Commercial Bid should give all relevant price information and should not
contradict the Technical Bid in any manner.
2.7.5 It is absolutely essential for the bidders to quote the lowest price for the
services in their own interest.

3. NON-TRANSFERABLE TENDER:

This tender document is not transferable. Only the bidder, who has purchased this tender
in its name or submitted the necessary RFP price (for downloaded RFP) will be eligible
for participation in the evaluation process.

4. TERMS AND CONDITIONS:

Terms and conditions for bidders who participate in the tender are specified in the section
called Terms and Conditions. These terms and conditions will be binding on all the
bidders and will also form a part of the contract, to be signed with the successful bidder
on the outcome of this tender process.

5. ERASURES OR ALTERATIONS:

The offers containing unauthenticated erasures or alterations will not be considered.
Therefore, there should be no unauthenticated hand written material, corrections or
alterations in the offer. If such unauthenticated erasures or alterations are present these
should be initialled by the person or persons authorized for signing the bid. Any deviation
may lead to the rejection of the bid.

6. COST OF BIDDING:

The Bidder shall bear all costs associated with the preparation and submission of its bid
and the Bank will in no case be responsible or liable for these costs, regardless of the
conduct or outcome of the bidding process.

7. CONTENTS OF RFP:

7.1 The requirements, bidding procedures and contract terms are prescribed in the RFP.
The RFP includes:

a) Invitation for Tender Offers
41
b) Background (including scope of consultancy work)
c) Instruction to Bidders (ITB)
d) Terms & Conditions
e) Annexures

7.2 The Bidder is expected to examine all instructions, annexures, scope of the
consultancy services, terms and conditions etc. in the Bidding Documents. Failure to
furnish all information required by the RFP or submission of a bid not substantially
responsive to the RFP in any aspect will be at the Bidders risk and may result in the
rejection of its bid.

8. PRE-BID MEETING:

8.1 For the purpose of clarification of issues related to this RFP for the bidders, the Bank
intends to hold a Pre-Bid Meeting on the date and time as indicated in the RFP. The
queries of the bidders should reach the Bank in writing or by e-mail on or before the
stipulated date and address mentioned in this RFP. It may be noted that queries of any
bidder received after the Pre-Bid meeting shall not be entertained. The clarifications
given in the Pre-Bid meeting will be available on the Banks Website. The Bank will
have liberty to invite any outside agency, wherever necessary, to be present in the pre-
bid meeting to reply to the technical queries of the bidders in the meeting.

8.2 The prospective bidders, who have purchased a copy of the RFP or submitted the bid
price (for downloaded RFP), shall be permitted to attend a pre-bid meeting to be held
as indicated in the Invitations for Bids after publication of RFP. Up to a maximum of 2
(two) authorized representatives of each prospective bidder will be permitted to attend
the pre-bid meeting. However the Bank, at its discretion, may permit an additional
representative of any prospective bidder to attend the pre-bid meeting.

8.3 Any modification of the RFP, which may become necessary as a result of the Pre-Bid
Meeting, shall be made by the Bank exclusively through the issue of an Addendum and
will be sent to all prospective bidders who have purchased the RFP, allowing at least 4
days time prior to the last date for receipt of bids.

8.4 Non-attendance at the Pre-bid Meeting will not be a cause for disqualification of a
bidder.

9. AMENDMENT OF RFP:

9.1 At any time prior to the deadline for submission of bids, the Bank, for any reason,
whether at its own initiative or in response to a clarification requested by a prospective
Bidder in the Pre-Bid meeting, may modify the RFP by amendment.

9.2 All prospective Bidders who have purchased the RFP will be notified of the amendment
in writing or by fax or e-mail and on the website of the Bank, and the same will be
binding on them.

9.3 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.

9.4 Bank will modify the scope of work and payment terms of this RFP with a view to
comply with RBI guidelines on adopting Advanced Approaches under Basel II
implementation by Bank.
42

10. LANGUAGE OF BID:

The bid prepared by the Bidder, all correspondence and documents relating to the bid
exchanged by the Bidder & the Bank shall be written in English.

11. BID VALIDITY:

Bid shall remain valid for 180 days from the date of opening of Technical Bid.

12. EARNEST MONEY DEPOSIT:

12.1 The bidder shall furnish as part of its bid, Earnest Money Deposit of Rs. 10,00,000/-
(Rupees Ten Lakh only).

12.2 The Earnest Money Deposit is required to protect the Bank against risk of bidders
conduct during the period of bid validity.

12.3 The Earnest Money Deposit shall be denominated in INDIAN RUPEES only and shall
be in any one of the following forms.

A bank guarantee issued by a Scheduled Indian Bank or a Foreign bank located in
India in the Form(Annexure-2) provided in the RFP and valid for forty five (45) days
beyond the validity of the bid; or

A Demand Draft or Pay Order issued in favour of Bank of Maharashtra and payable
at Pune.

12.4 Any bid not secured in accordance with ITB Clause-12.1 and 12.3 above will be
rejected by the Bank as non-responsive.

12.5 The Earnest Money Deposit will have to be submitted for a period of (180+45) days.
Earnest Money Deposit valid for a shorter period shall be rejected by the Bank as
non responsive.

12.6 The bid security may be forfeited if a Bidder withdraws its bid during the period of bid
validity specified by the Bidder on the Bid Form.

12.7 The Earnest Money Deposit of the unsuccessful bidders will be returned after
completion of the process, whereas the Earnest Money Deposit of the finally selected
bidder will be returned after submission of the Performance Security.

12.8 In exceptional circumstances, the Bank may solicit the Bidders consent to an
extension of the period of bid validity. The request and the responses thereto shall be
made in writing or by fax/email. The Earnest Money Deposit provided under ITB
Clause-14 shall also be suitably extended. A bidder acceding to the request will
neither be required nor be permitted to modify its bid. A bidder may refuse the
request without forfeiting its Earnest Money Deposit. In any case the Earnest Money
Deposit of the bidders will be returned after the completion of the process.

43

13. FORMAT AND SIGNING OF BID:

13.1 The Bidder shall prepare two copies each of the Technical & Commercial bid clearly
marking each Original Bid and Copy Bid as appropriate. In the event of any
discrepancy between them, the original shall govern. Original copy of Earnest
Money Deposit should be submitted with the Original Bid.

13.2 The original and all copies of the bid shall be typed or written in indelible ink and shall
be signed by the Bidder or a person or persons duly authorised to bind the Bidder to
the Contract. All pages of the Bid except for un-amended printed literature shall be
numbered serially and initialed by the person or persons signing the bid.

13.3 The bid shall contain no interlineations, erasures or overwriting except as necessary
to correct errors made by the bidder, in which case such corrections shall be initialed
by the person or persons signing the bid.

14. SUBMISSION OF BID:

14.1 The Bidders shall seal the original and copy bids separately.

14.1.1 Thus there will be 2 outer envelopes named as Original Bid and Copy Bid.

14.1.2 Original Bid packet should contain 2 separate sealed envelopes one
containing Quotation for Consultancy Services for Risk Management
Advanced Approaches under Basel II Framework - Technical Bid-
ORIGINAL as per ITB clause 2.6 and another Consultancy Services for
Risk Management Advanced Approaches under Basel II Framework -
Commercial Bid-ORIGINAL as per ITB clause 2.7. Original Earnest Money
Deposit or Bank Guarantee should be submitted in the envelope of
Technical Bid - Original.

14.1.3 Copy Bid packet should contain 2 separate sealed envelopes one containing
Quotation for Consultancy Services for Risk Management Advanced
Approaches under Basel II Framework - Technical Bid-COPY as per ITB
clause 2.6 and another Quotation for Consultancy Services for Risk
Management Advanced Approaches under Basel II Framework -
Commercial Bid-COPY as per ITB clause 2.7. A photocopy of the Earnest
Money Deposit or Bank Guarantee should be submitted in the envelope of
Technical Bid Copy.

14.2 In addition to the above marking, each envelope must be super-scribed with the
following information:

a) RFP Reference Number
b) Quotations for Consultancy Services for Risk Management Advanced
Approaches under Basel II Framework
c) Name and Address of Bidder

This will enable the Bank to return the bid unopened in case it is declared
unacceptable for any reason whatsoever.

44

14.3 All the inner and outer envelopes shall be addressed to The Bank at the address
given below:

THE GENERAL MANAGER
Bank of Maharashtra
Lokmangal, 1501, Shivaji Nagar
Pune 411 005

14.4 If the outer envelopes are not sealed and marked as required by ITB Clause -14.1,
the Bank will assume no responsibility for the bids misplacement or premature
opening.

14.5 If any inner envelope is found to contain both technical and commercial bids, then
that bid will be rejected summarily. If any outer envelope is found to contain only
the Technical Bid or Commercial bid, it will be treated as incomplete and will be
liable for rejection.

14.6 Bids submitted through Telex, Cable, Facsimile (Fax) or E-mail will be rejected.

15. DEADLINE FOR SUBMISSION OF BID:

Bids must be received by the Bank at the address specified under ITB Clause 14.3 and
not later than the time and date specified in Section 1 of the RFP document. In the event
of the specified date for the submission of Bids being declared a holiday for the Bank, the
bids will be received up to the declared time on the next working day.
The Bank may, at its discretion, extend the deadline for submission of Bids by amending
the RFP in accordance with ITB Clause- 9, in which case all rights and obligations of the
Bank and Bidders previously subject to the deadline will thereafter be subject to the
deadline as extended.

16. LATE BID:
Any bid received by the Bank after the deadline for submission of bids prescribed by the
Bank will be rejected and returned unopened to the Bidder.

17. MODIFICATION AND WITHDRAWAL OF BID:

The Bidder may modify or withdraw its bid after the bids submission, provided that
written notice of the modification including substitution or withdrawal of the bids is
received by the Bank prior to the deadline prescribed for submission of bids.
The Bidders modification or withdrawal notice shall be prepared, sealed, marked and
dispatched in accordance with the provisions of ITB Clause 14. A withdrawal notice
may also be sent by fax/e-mail but followed by a signed confirmation copy, postmarked
not later than the deadline for submission of bids.

No bid may be modified subsequent to the deadline for submission of Bids

45
No bid may be withdrawn in the interval between the deadline for submission of bids and
the expiry of the period of Bid validity specified by the Bidder on the Bid Form.
Withdrawal of the bid during this interval may result in forfeiture of Earnest Money
Deposit, pursuant to ITB Clause 12.6.

18. BID OPENING:

18.1 The Bank will open only the Technical Bids as per the schedule mentioned in RFP
document. The Commercial bids of only technically qualified bidders will be opened on
a later date subsequent to the technical evaluation. The Bank will notify the date and
time of opening of the Commercial bids to the technically qualified bidders.

18.2 Attendance of all the authorized representatives of the bidders who are present at Bid
Opening will be taken in a register against name, name of the company and with full
signature. A copy of the authorization letter should be brought for verification.

18.3 Each Bid will be numbered serially, signed and dated by three Officers of the Bank
except printed literature, brochure and reports.

18.4 The following details will be announced at the bid opening:

a) Bidders names,
b) Bid Modifications or withdrawals,
c) Technical Details (in case of Technical bid opening),
d) Bid Prices & Discounts if any (in case of Commercial bid opening),
e) Presence or absence of Earnest Money Deposit (in case of Technical bid
opening) and such other details as the Bank, at its discretion, may consider
appropriate.

18.5 Alterations in the bids, if any, made by the bidder / companies would be signed legibly
to make it perfectly clear that such alterations were present on the bids at the time of
opening. It would be ensured that alterations are signed by the bidder/companys
executive who has signed the bid or by the bidder/companys representative authorized
by the executive who has signed the bid.

18.6 Wherever any erasing or cutting is observed, the substituted words would be encircled
and initialed by the bank officer singly and the fact that such erasing / cutting of the
original entry were present on the bid at the time of opening shall be recorded.

18.7 An on the spot statement giving details of the bids opened and other particulars as
read out during the opening of the bids will be prepared which will then be signed by all
the bidders/representatives and bank officers present at the time of opening of bids.

18.8 Bids (and modifications sent pursuant to ITB Clause-16) that are not opened and read
out at Bid opening shall not be considered further for evaluation, irrespective of the
circumstances. Such Bids will be returned unopened to the Bidders.

18.9 Commercial bids of those bidders who have not been technically qualified will be
returned unopened to the concerned bidders at their recorded address.

46

19. CLARIFICATIONS OF BID:

To assist in the scrutiny, evaluation and comparison of offers the Bank may, at its discretion,
ask some or all bidders for clarification of their offer. The request for clarification and the
response shall be in writing and no change in the price or substance of the bid shall be
sought, offered or permitted.

20. PRELIMINARY EXAMINATION:

20.1 The Bank will examine the bids to determine whether they are complete, whether any
computational errors have been made, whether required sureties have been furnished,
whether the documents have been properly signed and whether the bids are generally
in order.

20.2 Arithmetical errors if any will be rectified on the following basis.

20.2.1 If there is discrepancy between the unit price and the total price that is obtained
by multiplying the unit price and quantity, the unit price shall prevail and the total
price shall be corrected.
20.2.2 If there is a discrepancy between words and figures, the amount in words will
prevail.
20.2.3 If the bidder does not accept the correction of errors as per ITB clause 20.2.1 &
ITB Clause 20.2.2, its bid will be rejected.

20.3 The Bank, at its discretion, may waive any minor infirmity, nonconformity or irregularity
in a Bid, which does not constitute a material deviation, provided such waiver does not
prejudice or affect the relative ranking of any Bidder. This shall be binding on all
bidders and the Bank reserves the rights for such waivers.

20.4 Prior to the detailed evaluation, pursuant to ITB Clause-21, the Bank will determine the
substantial responsiveness of each bid to the RFP. For purposes of these clauses, a
substantially responsive bid is one, which conforms to all the terms & conditions of the
RFP without material deviations. Deviations from or objections or reservations to critical
provisions such as those concerning Earnest Money Deposit, Performance Security,
Force Majeure, Applicable Law and Taxes & Duties will be deemed to be material
deviation. The Banks determination of a Bids responsiveness is to be based on the
contents of the Bid itself without recourse to extrinsic evidence. Banks decision in this
respect shall be final.

20.5 If a Bid is not substantially responsive, it will be rejected by the Bank and may not
subsequently be made responsive by the bidder by correction of the non-conformity.

21. EVALUATION OF BIDS:

21.1 The Bank will evaluate / scrutinize and compare the bids, which have been determined
to be substantially responsive, pursuant to ITB Clause-20.

21.2 EVALUATION OF TECHNICAL BIDS:
Technical bids will be subjected to banks internal evaluation process. The bidders will
be required to give a presentation to the Bank for technical evaluation.
47

21.3 Criterion for evaluation of Technical bids:
The evaIuatIon crIterIa are as foIIows:

Sr.
No.
Evaluation Criteria Score to be
awarded
Maximum
Score
Credentials
1 Number of PSU banks where the consultant has
performed/is performing credit risk data gap
analysis for advanced approaches
5
3 or more 5
2 2
1 1

2 Number of PSU banks in India where the
consultant has performed RFP development &
vendor selection for credit, market & operational
risks
10
2 or more 10
1 5
0 0
3 Number of banks in India where the consultant has
done / or doing project management of
implementation for advanced approaches
5
2 or more 5
1 2
0 0
4 Number of banks in India where the consultant has
performed ICAAP development or validation
5
4 or more 5
3 2
2 1
0 0
5 Number of banks where the consultant has done
end to end ORM implementation
5
2 or more 5
1 2
0 0

6 Number of assignments in India on Model
Validation for Credit Risk
5
2 or more 5
1 2
0 0
7 Number of Banks, the consultant is involved for
Market Risk for IMA application to RBI
10
With at least one Bank in India 10
No 0

8 Experience in working with regulatory bodies and
industry bodies (like RBI & IBA)
5
Yes 5
48
No 0

Team
9 Number of team members who have credit risk
model development & validation experience in
India
5
2 or more 5
1 2

10 Number of team members with IMA approach for
Market Risk implementation experience in India
5
2 or more 5
1 2

11 Number of team members with ORM
implementation experience in India
5
2 or more 5
1 2

12 Number of team members with ICAAP review or
development experience
5
4 or more 5
1 to 3 2

13 Number of team member with Credit risk UAT,
program management experience in India
10
2 or more 10
1 2

14 Are all the deliverables matching the RFP criteria,
without any major modifications
10
All deliverables are identical 10
less than 2 deliverables are different 5
2 and above deliverables are different 2

15 Technical proposal evaluation (Evaluation based
on presentation by the bidder consultant)

Excellent (Meets RFP requirements & very
detailed)
10 10
Good 7
Just met expectations 5
Below average 2

Technical Evaluation
The Bank would initially evaluate the technical proposals submitted by the consultants as per
a scoring scheme and arrive at the technical score for the current proposal.
Thereafter a Relative Technical Score (RTS) for each consultant would be calculated as per
the following formula:
RTS = T / T
high
* 100
49
Where,
RTS: Relative score for Technical Proposal of each consultant
T: Technical score of the current proposal
T
high
: Highest technical score obtained
Only those bidders scoring 70% or above in the technical evaluation will be short-listed for
commercial evaluation. However, in case there are less than 2 bidders who score 70% or
above, then the Bank may at its discretion choose the top 2 scores subject to a minimum
score of 60%.

21.4 EVALUATION OF COMMERCIAL BIDS

The Bank will open and scrutinize the commercial bids of the technically qualified bidders
only pursuant to ITB Clause-21.2 and 21.3. The commercial bid will have to be submitted in
the format as per Annexure-10. Commercial bid should not have any alteration or
overwriting. The calculation / amount arrived by the Bank will be final and will be binding on
the bidders.

The Commercial bids of only those bidders having qualified in the technical evaluation will be
opened. For commercial evaluation:
Total cost of consultancy, design, implementation and program management shall be
considered for the project.
Total cost of consultancy (inclusive of all taxes) shall include consultancy charges +
cost of implementation (including out of pocket expenses) quoted in the bid.
The commercial bids of the technically short-listed consultants would be opened and
the Relative Commercial Score (RCS) for each consultant will be calculated as given
below:
Relative Commercial Score for each consultant:
RCS = L1 / L * 100
Where,
RCS: Relative score for Commercial Proposal of each consultant
L: Amount quoted by the current proposal
L1: Lowest Amount quoted by L1 proposal

Final Selection
For the final selection of a consultant, a combined score based on techno-commercial
evaluation will be arrived at as follows:
For each of the short listed consultants, the combined score is calculated as given below:
Combined score = RTS * 0.7 + RCS * 0.3
The proposal having highest combined score will be declared as successful consultant and
eligible for award.

50

22. CONTACTING THE BANK:

22.1 Any effort by a Bidder to influence the Bank in the Banks bid evaluation, bid
comparison or contract award decisions may result in the rejection of the Bidders bid.

23. POST QUALIFICATION:

23.1 The Bank will determine to its satisfaction whether the Bidder selected is qualified to
perform the contract.

23.2 The determination will take into account the Bidders financial and technical capabilities.
It will be based upon examination of the documentary evidence of the Bidders
qualifications submitted by the Bidder, as well as such other information as The Bank
deems necessary and appropriate including details of experience and records of past
performance.

23.3 An affirmative determination will be prerequisite for selection. A negative determination
will result in rejection of the Bidders bid.

24. THE BANKS RIGHT:

24.1 The Bank reserves the right to cancel or modify or reschedule the scope of work of this
RFP, in case implementation scope and timelines are desired to be amended in light of
regulatory guidelines.

24.2 The Bank reserves the right to accept or reject any bid, and to annul the bidding
process and reject all bids at any time prior to award of Contract, without thereby
incurring any liability to the affected Bidder or Bidders or any obligation to inform the
affected Bidder or Bidders of the grounds for the Banks action. Bank reserves the right
to modify any terms, conditions and specifications of the RFP.

24.3 Bank reserves the right to obtain revised price bids from the bidder with regards to
changes in RFP clauses or if the Bank is not satisfied with the price offered.

24.4 Bank reserves the right to accept any Bid in part or whole.

25. SIGNING OF CONTRACT:

25.1 When the Bank notifies the Bidder that its bid has been accepted, the successful bidder
shall execute separate Service Level Agreement in the draft acceptable to the Bank.

25.2 The successful bidder shall sign and date the Service Level Agreement within
21(Twenty One) days of receipt of communication from the Bank and send it to the
Bank along with the required Performance Security.

25.3 Bank reserves the right to select the next ranked bidder if the selected bidder withdraws
his proposal after selection or at the time of finalization of the contract or disqualified on
detection of wrong or misleading information in the proposal.

25.4 In case the bidder fails to comply with ITB Clause 25.1 and 25.2 or in case the bidder
51
withdraws his proposal after selection, as per ITB Clause 25.3 the Earnest Money
Deposit of the bidder will be forfeited.

26. PROJECT SITE:

The Bank is having its Central Office at Pune.. The successful bidder (i.e. selected
consultant) for providing consultancy services as per the scope of services defined in this
RFP, shall be required to visit Banks office (normally Central Office) at Pune or Mumbai to
participate in various meetings, discussions, etc. The Bank will not pay or reimburse any cost
towards journey, lodging, boarding etc. for the visit of consultant(s) at Pune / Mumbai.
However, the Bank shall make arrangements or reimburse for the journey, lodging &
boarding for the consultant(s) if their services are required by the Bank outside Pune /
Mumbai at rates to be notified by the Bank.

27. NO COMMITMENT TO ACCEPT LOWEST OR ANY TENDER:

27.1 The Bank shall be under no obligation to accept the lowest or any other offer received in
response to this tender notice and shall be entitled to reject any or all offers including
those received late or incomplete offers without assigning any reason whatsoever.

27.2 The Bank reserves the right to make changes, if necessary, in the terms and condition
of the RFP.

27.3 The Bank will not be under obligation to meet and have discussions with any of the
bidders and/or listen to their representations.

52

Section 4

TERMS AND CONDITIONS

1. PERFORMANCE SECURITY:

The successful bidder will have to give Performance Bank Guarantee (as per Annexure-13)
for 15% of the total project cost (i.e. Consultancy Fees for the services for implementation of
Advanced Approaches under Basel II Framework in the Bank), while submitting the
acceptance of order. The validity of the Performance Bank Guarantee should be for a
minimum period of 24 months and, if required, it should be renewed till completion of the
project.

Any alteration in the format of BG would lead to rejection of Bid.

2. TIME PERIOD FOR COMPLETION OF ASSIGNMENT & PAYMENT TERMS:

Month 1 will be the first month after the contract agreement for the consultancy is executed.

Work Stream / Phase Timelines

Start End

Workstream1: Credit Risk Management & ICAAP

Total period: 18 months
Phase 1: Preparation of IRB Implementation Month 1 Month 3

Phase 2: Implementation of IRB Approach & ICAAP
Development

Month 4 Month 9

Phase 3: Achievement of minimum standards for AIRB &
Implementation of Basel II software, application to RBI

Month 10 Month 18
Workstream 2: Operational Risk Management



Month 1 Month 4

Phase 2: Risk and Control Assessments

Month 2 Month 8

Phase 3: Loss event management Framework and KRI
Framework

Month 3 Month 8

Phase 4: Methodology and Framework for quantifying
operational risk under AMA

Month 9 Month11

Month 4 Month 5
53

Phase 6: Internal Audit Convergence, new
product/process approval and Use test approaches,
application to RBI
Month 12 Month 14

Workstream 3: Market Risk Management


Phase 1: Current State Assessment of existing Policies,
Procedures and MIS

Month 1 Month 1

Phase 2 : Prepare the Bank to comply with the qualitative
requirements defined by Basel / RBI for the Internal Model
approach

Month 2 Month 4

Phase 3 : Defining the approach and methodology for
addressing the Quantitative Standards required for
Internal Models approach by Basel/RBI

Month 4 Month 6

Phase 4 : Vendor Selection for Market Risk Solution

Month 2 Month 2
Phase 5: Preparation of Market Risk IMA application to
RBI
Month 6 Month 6
Workstream 4: Ongoing assistance in software
implementation & application to RBI
In synchronization with various
timelines for various phases
under Credit, Market &
Operational Risk
Workstream 5: Credit Risk Internal Rating Model
development
Month 1 Month 6

It is made clear that continuation and duration of the tasks will be at the sole discretion of the
Bank. Bank may decide to alter the time lines for any of the tasks stated above.

Payment Terms:
Payment will be released by the Bank after deduction of applicable taxes at source of the
agreed professional fees to the Consultant (for which contract will be executed) in stages on
completion of the activities as per the phases defined in the scope of services under the
RFP. No advance payment will be made. It may be noted that the criteria mentioned below
is only for the payment of the professional fees. The consultant shall cover the entire scope
of services mentioned and deliver all the deliverables as mentioned under the scope of
Services of this RFP document.

Payment will be based on the phases covered as per the time line mentioned above on the
basis of progress of the consultancy contract.

54
Schedule of payment of agreed professional fees to the consultant.
Credit
Risk
Operational Risk Market Risk Total
Workstream 1 to 3 35% 30% 15% 80%
Phase 1 7% 4% 1% 12%
Phase 2 18% 6% 4% 28%
Phase 3 10% 8% 7% 25%
Phase 4 -- 6% 2% 8%
Phase 5 -- 3% 1% 4%
Phase 6 -- 3% -- 3%
Workstream 4 5%
Workstream 5 100% on completion
Bank will release payment within 20 working days from the date of receipt of invoice. In case
of dispute/s, payment will be made within 15 working days of resolution of dispute/s. No
penal interest will be paid for delayed payment.

Ten percent (10%) of the professional fees would be paid post successful pilot phase
implementation of all the systems and successful setting up of advanced approaches
under Basel II for credit, operational and market risk.
Five percent (5%) of the contract amount will be retained by the Bank as Retention
Money and will be released one year after successful approval by RBI under Basel II
guidelines as under:
Approval of Banks application under Advanced Approaches by RBI.
Conduct of SREP by RBI and rectification of all deficiencies indicated by RBI
during SREP.
The release of payments and retention money will be further subject to the
following conditions.
The consultant should delegate all the scope into deliverables.
All the deliverables as mentioned under Scope of services under the RFP
should be covered phase-wise.
The documents, reports and drafts submitted by the consultant should comply
with Basel II and RBI guidelines and are subject to acceptance by the Bank.
All the recommendations submitted by the consultant should be supported by
documentary evidence.
The bidder cannot change the Project Manager during the entire period of
execution of the scope of unless consented by the Bank in writing by the Bank.
The bidder should make outlay of resources to be deployed in the bid
document for the project which includes, inter-alia, the number of personnel,
skill profile of each personnel, duration etc.
The TDS amount on prevailing rate and work contract tax etc. shall be
deducted from consultants running account / final bills. Necessary certificates
shall be issued to the consultant by the Bank. All taxes including works
contract tax etc. In respect of this contract shall be payable by the consultant
55
and the Bank will be not be liable for any claim whatsoever in this respect
during the period of contract.

3. DELAY IN ADHERING TO THE PROJECT TIMELINES:

The consultant must strictly adhere to the time schedule, as specified in the Contract,
executed between the bank and the Consultant, pursuant hereto, for performance of the
obligations arising out of the contract and any delay will entitle 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 system due to bidder consultants fault from
schedule furnished by the bidder consultant and accepted by the Bank, Bank will recover 1%
on the total cost of the project (i.e. consultancy fees) paid to the bidder consultant for each
week of delay. This recovery will be subject to an upper limit of 10% of the consultancy fees.
The right to impose and recover penalty shall be in addition to and without prejudice to the
right of the Bank to terminate the contract and resort to other legal remedies. The
order/contract if cancelled, 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
consultant and will be dealt with accordingly.

The Bank also reserves its right to claim damages for improper or incomplete execution of
the assignment.

4. INDEMNITY:

The bidder will indemnify the Bank against all actions, proceedings, claims, suits, damages
and any other expenses for causes attributable to bidder/consultant (Annexure 12). The total
liability of the selected bidder under the contract will not exceed the total cost of the project.

5. GOVERNING LANGUAGE:

The governing language of the contract shall be English. All correspondence and other
documents pertaining to the contract which are exchanged by the parties shall be written in
this language.

6. APPLICABLE LAW:

The contract shall be interpreted in accordance with the laws prevalent in India.

7. PUBLICITY:

Any publicity by the bidder consultant in which the name of the Bank is to be used should be
done only with the explicit written permission of the Bank.

8. FORCE MAJEURE:

The Consultant shall not be liable for forfeiture of its performance security, liquidated
damages or termination for default, if any 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.

56
For purposes of this Clause, Force Majeure means an event beyond the control of the
Consultant and not involving the Consultants fault or negligence and not foreseeable. Such
events may include, but are not restricted to, acts of the Bank in its sovereign capacity, wars
or revolutions, fires, floods, epidemics, quarantine restrictions.

If a Force Majeure situation arises, the Consultant shall promptly notify the Bank in writing of
such condition and the cause thereof within fifteen calendar days. Unless otherwise directed
by the Bank in writing, the Consultant 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.

9. BIDDERS INTEGRITY:

The bidder consultant is responsible for and obliged to conduct all contracted activities in
accordance with the contract using state of the art methods and economic principles and
exercising all means available to achieve the performance specified in the contract.

10. BIDDERS OBLIGATIONS:

The bidder consultant is obliged to work closely with the Banks staff, act within its own
authority and abide by directives issued by the Bank and implementation activities.

The bidder consultant is responsible for managing the activities of its personnel or its
representatives and will hold itself responsible for any misdemeanors.

The bidder consultant shall be required to execute separate Service Level Contract in
the draft acceptable to the Bank. The bidder consultant will be under obligation to provide
consultancy services as per the contract.

The bidder consultant will treat as confidential all data and information about the Bank,
obtained in the execution of their responsibilities, in strict confidence and will not reveal such
information to any other party without the prior written approval of the Bank.

Except as otherwise expressly provided in the text of the engagement letter, one party
receiving Confidential Information, as defined below, in connection with the provision of the
Services shall not disclose such Confidential Information outside of its organization or use it
for any purpose other than in connection with the Services. Confidential Information means
all information in which a party has rights that is not generally known to the public and that
under all the circumstances should reasonably to be treated as confidential or proprietary,
whether or not the material is specifically marked as confidential. Notwithstanding the
foregoing, Confidential Information does not include information that: (i) is, as of the time f its
disclosure, or thereafter becomes, part of the public domain through a source other than the
recipient in violation of this Agreement; (ii) was known to the receiving party as of the time of
its disclosure, as can be demonstrated by contemporaneous written evidence; (iii) is
independently developed by the receiving party without reference to the Confidential
Information of the disclosing party as can be demonstrated by contemporaneous written
evidence, or; (iv) is subsequently learned from a third party not known by the receiving party
to be subject to an obligation of confidentiality with respect to the information disclosed, or (v)
is disclosed pursuant to applicable law, regulation, subpoena, other legal process or
professional obligations, or in connection with the enforcement of the recipients rights under
this Agreement.

For purposes of this Agreement, Confidential Information shall mean information (other than
Tax Reports) provided by or on behalf of a party to the other party or its representatives in
57
connection with the Services and relating to the business, operations, methodologies,
technologies, personnel, customers, vendors, financial condition or procedures of a party,
including, without limitation, the contents of this Agreement, that is not generally known to the
public and that, under all of the circumstances, ought reasonably to be treated as confidential
and / or proprietary.

The parties may correspond in connection with the Services by means of the Internet or
other electronic media or provide information to each other in electronic form. Use of such
electronic media shall not alone constitute a breach of a partys confidentiality obligations
under this Agreement.

11. USE OF CONTRACT DOCUMENTS AND INFORMATION:

The bidder consultant shall not, without the Banks prior written consent, disclose the
Contract or any provision thereof or any specification, plan, drawing, pattern or information
furnished by or on behalf of the Bank in connection therewith, to any person other than a
person employed by the bidder in the performance of the Contract. Disclosure to any such
employed person shall be made in confidence & shall extend only as far as may be
necessary for purposes of such performance.

The bidder consultant shall not, without the Banks prior written consent, make use of any
document or information except for purposes of performing the Contract.

Any document, other than the Contract itself, shall remain the property of the Bank and shall
be returned to the Bank on completion of the bidders performance under the Contract, if so
required by the Bank.

12. CONTRACT AMENDMENT:

No variation in or modification of the terms of the contract shall be made except by written
amendment signed by the parties.

13. PROJECT MANAGEMENT:

The Bank and the bidder consultant will nominate a Project Manager each immediately on
acceptance of the order, who will be the single point of contact for the project. However, for
escalation purpose, details of other persons will also be given.

14. TERMINATION FOR CONVENIENCE:

The Bank, by written notice sent to the bidder consultant, may terminate the Contract, in
whole or in part, at any time for its convenience. The notice of termination shall specify that
termination is for the Banks convenience, the extent to which performance of work under the
Contract is terminated and the date upon which such termination becomes effective.

15. ASSIGNMENT:

The bidder consultant shall not assign, in whole or in part, its obligations to perform under the
contract, except with the Banks prior written consent.

58
16. CORRUPT OR FRAUDULENT PRACTICES:

As per CVC directives, it is required that bidder consultant observes the highest standard of
ethics during the selection of consultant and execution of such contracts. In pursuance of this
policy;
(i) Corrupt practice means the offering, giving, receiving or soliciting of any thing of value to
influence the action of a public official in the selection process or in contract execution;
And
(ii) Fraudulent practice means a misrepresentation of facts in order to influence a selection
process or the execution of 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;

The Bank will reject a proposal for award if it finds that the Bidder recommended for award
has engaged in corrupt or fraudulent practices in competing for the contract in question;

The Bank will declare a firm ineligible, either indefinitely or for a stated period of time, for
award of a contract if at any time it finds that the firm has engaged in corrupt or fraudulent
practices in competing for, or in executing a contract.

17. 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, Bank
of Maharashtra 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.

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 Pune.

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.

18. PRIVACY AND SECURITY SAFEGUARDS:

The successful bidder consultant 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 successful Bidder under this contract or existing at any Bank location.

59
Annexure 1

Tender Offer Cover letter

Bid Reference No.: Date:

To:
Bank of Maharashtra
Central Office
Pune 411 005

Having examined the RFP (Ref. No. ) including all annexure the receipt of which is
hereby duly acknowledged, we, the undersigned, offer to deliver services in conformity with
the said RFP and in accordance with our proposal and total cost / consultancy fees indicated
in the Commercial Bid and made part of this bid.

We understand that that the RFP provides generic specifications about all the items and it
has not been prepared by keeping in view any specific bidder.

We undertake, if our bid is accepted, to deliver services and complete the project in
accordance with the scheduled time lines.

If our bid is accepted, we will provide the guarantee of a Bank in a sum equivalent to 10% of
the contract price for the due performance of the Contract in the form prescribed by the
Bank.

We agree to abide by this bid offer till 180 days from the date of opening of the commercial
bid and our offer shall remain binding upon us and may be accepted by the Bank any time
before the expiration of that period.

Until a formal contract is prepared and executed, this bid offer, together with the Banks
written acceptance thereof and the Banks 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
contract, we will strictly observe the laws against fraud and corruption in force in India
namely Prevention of Corruption Act 1988.

We understand that the Bank is not bound to accept the lowest or any of the offers the Bank
may receive.

Place:
Dated this ______ day of _________2011

Signature: ______________________________________

(In the Capacity of): ________________________________

Duly authorized to sign the bid offer for and on behalf of

(Name & Address of Bidder) ___________________________________
___________________________________

60
Annexure 2
FORMAT OF BANK GUARANTEE (BG) FOR EARNEST MONEY DEPOSIT
(ON A NON-JUDICIAL STAMP PAPER OF RS.100.00)
Bank Guarantee No.:
Date:
Period of Bank Guarantee:
Amount of Bank Guarantee: Rs.

To
Bank of Maharashtra
Central Office
Pune 411 005

WHEREAS _________________________ (hereinafter called the Bidder) has submitted its bid
dated_______ (date of submission of bid) for providing the consultancy services for implementation of
Advanced Approaches under Basel II Framework Management in response to Bank of Maharashtras
Request for Proposal ( RFP ) No. _______________ (hereinafter called the Bid).

KNOW ALL PEOPLE by these presents that WE______________(name of bank) having our
registered office at______________ (address of bank) (hereinafter called the Bank) are bound unto
BANK OF MAHARASHTRA (hereinafter called the Beneficiary) in the sum of Rs.___________/-
( Rupees ______________only) for which payment will and truly to be made to the said Beneficiary,
the Bank binds itself, its successors and assigns by these presents. Sealed with the common seal of
the said Bank this _____ day of_______ 20___.

THE CONDITIONS of this obligation are:
1. If the Bidder withdraws its Bid during the period of bid validity specified by the Bidder on
the Bid Form; or
2. If the Bidder, having been notified of the acceptance of its bid by the Beneficiary and the
bidder during the period of bid validity :
a) fails or refuses to execute the Contract Form if required; or
b) fails or refuses to perform, in accordance with the Terms and Conditions of the RFP or
Contract; or
c) fails or refuses
d) fails or refuses to furnish the Performance Security, in accordance with the Terms and
Conditions of the RFP or Contract;

We undertake to pay the Beneficiary up to the above amount upon receipt of its first written demand,
without the Beneficiary having to substantiate its demand, provided that in its demand the beneficiary
will note that the amount claimed by it is due to it owing to the occurrence of one or both of the two
conditions, specifying the occurred condition or conditions.

This guarantee will remain in force up to and including 45 days after the period of the bid validity i.e.
up to_______(mention date of expiry which should be a minimum of bid validity+45 days), and any
demand in respect thereof should reach the Bank not later than the above date.

Notwithstanding any other term contained herein:
a) this guarantee shall be valid only up to _________________ (Insert Guarantee End Date)
whereupon it shall automatically expire irrespective of whether the original guarantee is
returned to the Bank or not; and
b) the total liability of Bank under this guarantee shall be limited to Rs.__________ (Rupees
_______________________ only)

Place : SEAL Code No. SIGNATURE.

NOTE: BIDDER SHOULD ENSURE THAT THE SEAL & CODE NO. OF THE SIGNATORY IS PUT
BY THE BANKERS, BEFORE SUBMISSION OF BG
61
Annexure 3
Bidders Information

Details filled in this form must be accompanied by sufficient documentary evidence, in order
to verify the correctness of the information.
S. No. Item Details
1 Name of Company/ consultant
2 Postal Address
3 Telephone/Mobile and Fax numbers
4 Constitution of the Company/consultant
5 Name and designation of the person authorized
to make commitments to the Bank of
Maharashtra

6 Email Address
7 Sales Tax Number
8 Income Tax Number
9 Office/contact address in Pune, if any
10 Gross annual turnover of the bidder (not
of the group)
Amt. in Lakh: Year 2007-08
Year 2008-09
Year 2009-10

11 Net profit of the bidder (not of the group)
Amt. in Lakh: Year 2007-08
Year 2008-09
Year 2009-10

12 Brief profile indicating presence in Indian market
13 Experience in terms of volume of business,
number & value of projects handled

14 Details of domain expertise
15 Geography focus, number of employees etc.
16 Global and Local experience in the field under
reference including experience in BASEL II
Implementation. The relevant document /
certificate should be enclosed.

17 Number of personnel to be deployed for the
assignment with their brief profile and experience
of project team in financial services sector. The
Project Coordinator, once assigned to the Bank
should not be replaced except under very
exceptional circumstances and with consent from
the Bank.

18 Past Credentials of the Consultant
19 Requirements from the Bank for implementing
the assignment. This should include the details of
the manpower required from the Bank to
implement the framework in terms of the RFP.

20 The Consultant should furnish the details of at
least one nationalized Bank/large Private Sector
Scheduled Commercial Bank where similar
frameworks have been implemented / under
implementation, indicating site addresses, names
and telephone numbers of persons to be
contacted for reference purposes. A letter of

62
reference from the Bank indicating the type of
assignment, date of commencement and date of
operationalization must be enclosed.
21 Details of the similar works completed / under
execution with Name and location of the client &
No. of their branches, Nature and type of the
project Services delivered / rendered, Scope of
the services provided, Value/cost of the project
and duration of the project, Contact details of the
client and evidence letter from the client.

{Figures at item 10 & 11 should be audited figures and copy of audited financial statements
for above years to be submitted}

DECLARATION
We hereby declare that the information submitted above is complete in all respects and true
to the best of our knowledge. We understand that in case any discrepancy or inconsistency
or incompleteness is found in the information submitted by us, our application is liable to be
rejected.

Place:
Date: SEAL (Authorized Signatory)

63
Annexure 4

Masked Price Bid
(To be attached with the Technical Bid without stating the price)

Date: ..............................

Please give detailed assumptions and specifications considered to arrive at the Commercial
Bid considering the workstreams and phases therein stated under scope of work (Section 2)
and also under terms & conditions (Section 4). Please do not quote price against the details.

Dated this ....... day of ............................ 2011

_____________________ ___________________________
(Signature) (In the capacity of)

Duly authorized to sign Proposal for and on behalf of ___________________________

64
Annexure 5

Format for furnishing the proposed team profile

Sr.
No.
Name of the
proposed
Engagement
Manager (team
leader) /
proposed team
member
Professional
Qualification
(Including
certifications &
accreditations)
Experience
with the
consulting
(bidding) firm
Area of
expertise
Details of
projects
handled /
consultancy
services
rendered with
details of
client, as a
team member
or team leader
etc.

Dated this ....... day of ............................ 2011

____________________________ ________________________
(Signature) (In the capacity of)

Duly authorized to sign Proposal for and on behalf of ________________________

65

Annexure-6

Letter of Confirmation

To
The General Manager
Bank of Maharshtra,
Central Office,
Lokmagal
1501, Shivaji Nagar,
Pune 411 005.

RFP Ref. No.:

Dear Sir,

We confirm having submitted the Bid and Annexures in accordance with the said RFP. The
details submitted by us are true and correct to the best of our knowledge and if it is proved
otherwise at any stage of execution of the contract, Bank of Maharashtra has the right to
summarily reject the proposal and disqualify us from the process.
We confirm that we will abide by the conditions mentioned in the Tender Document (RFP
and annexure) in full and without any deviation.
We, hereby acknowledge and confirm, having accepted that the Bank can at its absolute
discretion, apply whatever criteria it deems appropriate, not just limiting to those criteria set
out in the RFP and related documents, in selection of bidder consultants for providing
consultancy services.
We shall observe confidentiality of all the information passed on to us in course of the
tendering process and shall not use the information for any other purpose than the current
tender.
We also confirm that we have not been blacklisted by any Govt. Department / PSU / PSE or
Banks or otherwise not involved in any such incident with any concern whatsoever, where
the job undertaken / performed and conduct has been questioned by any authority, which
may lead to legal action.

Place :

66

Annexure-7

Bidders proposed methodology / approach for providing services to the Bank with
respect to the scope of consultancy work:

(A) Proposed methodology / approach :

(B) Details of deliverables, other than the deliverables specified by the bank, the bidder
proposes with specific reference to the scope of work :

Place :

67

Annexure- 8

Credential letter / Reference letter from Bank/s
(to be included with technical bid)

(On the letter Head of the Bank with designation of the authority issuing the same)

The Credential letter / Reference letter should state the scope of the consultancy service
rendered, status of the project assigned and overall experience of the bank about the
consultant.

(The bidder should also enclose signed copies of Scope of Work agreed with their clients as
proof of work)

68

Annexure-9
Reference Site Details-1

We give below the reference site details:

Name of the Bank
(client name)

Full Address of the Bank with PIN code
Brief description of he nature of
business/ process

Contact details (At least two contact
details of senior staff of the client are to
be provided for each reference)

Contact 1 Name:
Designation:
Landline No:
Cell No:
Email id:

Contact 2 Name:
Designation:
Landline No:
Cell No:
Email id:

Brief description of the scope of
Consultancy service provided (may attach
a separate write up)

Duration of assignment including start
date and end date

Approximate value of service (in rupees)
(Optional)

Note:
1) Letter of consent from the bank to act as Reference site to be enclosed.

69

Annexure-10
COMMERCIAL BID
(To be included in Commercial Proposal Envelope)

Date: ..............................

Sir,
Request for Proposal
RFP-Advanced Approaches under Basel II
Reference Number dated

In terms of the above-mentioned RFP document we submit herewith the commercial bid
(fees) for the assignment proposed by the Bank as Consultant. (Commercial bid be
submitted for each workstream and phase-wise under each workstream)

Work Stream / Phase Commercial
Bid Price
Workstream1: Credit Risk Management & ICAAP
Phase 1: Preparation of IRB Implementation

Phase 2: Implementation of IRB Approach & ICAAP Development

Phase 3: Achievement of minimum standards for AIRB & Implementation of
Basel II software, application to RBI

Workstream 2: Operational Risk Management

Phase 2: Risk and Control Assessments

Phase 3: Loss event management Framework and KRI Framework

Phase 4: Methodology and Framework for quantifying operational risk under
AMA


Phase 6: Internal Audit Convergence, new product/process approval and Use
test approaches, application to RBI

Workstream 3: Market Risk Management
Phase 1: Current State Assessment of existing Policies, Procedures and MIS

Phase 2 : Prepare the Bank to comply with the qualitative requirements
defined by Basel / RBI for the Internal Model approach

Phase 3 : Defining the approach and methodology for addressing the
Quantitative Standards required for Internal Models approach by Basel/RBI

Phase 4 : Vendor Selection for Market Risk Solution

70
Phase 5: Preparation of Market Risk IMA application to RBI

Workstream 4: Ongoing assistance in software implementation & application
to RBI

Workstream 5: Credit Risk Internal Rating Model development

TERMS AND CONDITIONS

1) The above quoted fee is for all the workstreams and phases.
2) The fee quoted includes the cost of all the deliverables in the scope of work in the RFP.
3) Bank will applicable TDS, while releasing payment, applicable as per the law.

We confirm that we will abide by all the terms and conditions mentioned in the RFP.

Dated this ....... day of ............................ 2011.

____________________ _________________________
(Signature) (in the capacity of)

Duly authorized to sign Proposal for and on behalf of ________________

71

Annexure- 11

Checklist of documents to be submitted

Documents Submitted
(Yes/No)
1)
2)
3)
4)
5)
6)
7)
8)
9)
10)
11)
12)

Note : Supporting documents of the annexures are be provided.

Place :
Date : SEAL (Authorized Signatory)

72

ANNEXURE -12

DEED OF INDEMNITY

This Deed of Indemnity executed at Pune on the -------------day of -------------- by -----------------
---------------------, a company registered under the Companies Act, 1956 and having its
registered office at -----------------------/M/s.---------------------------a partnership firm / company
having its registered office at ------------------------ (hereinafter called "the Obligor" which
expression shall unless it be repugnant to the subject, context or meaning thereof shall be
deemed to mean and include its successors).

IN FAVOUR OF

Bank of Maharashtra, a Government of India Undertaking, within the meaning of Banking
Companies (Acquisition & Transfer of Undertakings) Act, 1980 and having its Central Office
at Lokmangal, 1501, Shivaji Nagar, Pune -411005 (hereinafter called " Bank of Maharashtra "
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)

WHEREAS

The Obligator has:

Offered to do for Bank of Maharashtra /Indemnified, Implementation of Advanced
Approached under Basel II at Pune (hereinafter referred to as Advanced Approaches under
Basel II) as defined in the Agreement dated-----------------------made between the Obligor and
Bank of Maharashtra/Indemnified (the Agreement/Contract) and the Bid documents and
other related documents (the said documents) subject to certain terms, conditions,
covenants, provisions and stipulations contained therein.

Represented and warranted that they have all permissions, consents, approvals from all
authorities, both regulatory and non-regulatory, for performing the Services/doing the
Implementation of Advanced Approaches under Basel II for Bank of Mahrashtra/Indemnified
contemplated under the said documents and further represented and warranted that the
Implementation of Advanced Approaches under Basel II at the Bank of Maharashtra do not
violate any provisions of the applicable laws, regulations or guidelines including legal,
environmental under the various labour and industrial laws. In case there is any violation of
any law, rules or regulation, which is capable of being remedied, the same will be got
remedied immediately during the period of Services/tenure of the Agreement/Contract to the
satisfaction of Bank of Maharashtra;

Represented and warranted that they are authorized and legally and otherwise entitled and
competent to enter into such contractual arrangement(s) with Bank of
Maharashtra/Indemnified under the said documents; relying and based on the aforesaid
representations and warranties of the Obligor, Bank of Maharashtra/Indemnified has agreed
to avail the Services of the Obligor on the terms and conditions contained in Agreement with
the Obligor;

One of the conditions of the Agreement/Contract and the said documents is that the Obligor
is required to furnish an indemnity in favour of Bank of Maharashtra indemnifying the latter
against any loss, damages or claims arising out of any violations of the applicable laws,
regulations, guidelines during the rendering/performing of the Services/ Implementation of
73
Advanced Approaches under Basel II envisaged under the said documents as also for
breach committed by the Obligor on account of misconduct, omission and negligence by the
Obligor.

In pursuance thereof, the Obligor has agreed to furnish an indemnity in the form and manner
and to the satisfaction of Bank of Maharashtra as hereinafter appearing.

NOW THIS DEED WITNESSETH AS UNDER:-

(i) In consideration of Bank of Maharashtra/Indemnified having agreed to award the Bid and
the aforesaid assignment of providing Services/ Implementation of Advanced Approaches
under Basel II to the Obligor on the terms and conditions contained in the
Agreement/Contract and the said documents, more particularly described and stated therein,
the Obligor do hereby agree and undertake that:-

(ii) The Obligor shall, at all times hereinafter, save and keep Bank of Maharashtra harmless
and indemnified, including its respective directors, officers, agents, representatives, and
employees, etc. and keep them identified from and against any claim, demand, losses,
liabilities or expenses of any nature and kind whatsoever and by whomsoever made in
respect of Services/ Implementation of Advanced Approaches under Basel II or the said
documents and any damage caused from and against all suits and other actions that may be
threatened, instituted, taken or preferred against Bank of Maharashtra/Indemnified including
its respective directors, officers, agents, representatives, and employees, etc. by
whomsoever and all losses, damages, costs, charges and expenses that Bank of
Maharashtra/Indemnified including its agents, representatives and employees, etc. may incur
by reason or any claim/demand made by any claimant for any reason whatsoever or by
anybody claiming under them or otherwise for any losses, damages or claims or claims
arising out of all kinds of accidents, destruction, deliberate or otherwise, direct or indirect,
from those arising out of violation of applicable laws, regulations, guidelines and also from
the damages, if any, arising from fraudulent or criminal acts as well or any omissions, which
may occur while performing the Services or otherwise under the said documents.

(iii) The Obligor further agrees and undertakes that the Obligor shall, during the contractual
arrangements under the said documents, ensure that all the permissions, authorizations,
consents are obtained from the local and/or municipal and/or governmental authorities, as
may be required under the applicable laws, regulations, guidelines, orders framed or issued
by any appropriate authorities.

(iv) If any additional approval, consent or permission is required by the Obligor to execute
and perform the Agreement or Services/ Implementation of Advanced Approaches under
Basel II under the said documents, they shall procure the same and/or comply with the
conditions stipulated by the concerned authorities without any delay.

(v) The obligations of the Obligor herein are irrevocable, absolute and unconditional, in each
case irrespective of the value, genuineness, validity, regularity or enforceability of the
aforesaid agreement or the insolvency, bankruptcy, re-organization, dissolution, liquidation or
change in ownership of Bank of Maharashtra or Obligor or any other circumstance
whatsoever which might otherwise constitute a discharge or defence of Bank of
Maharashtra/Indemnified.

(vi) The obligations of the Obligor under this deed shall not be affected by any act, omission,
matter or thing, would reduce, release or prejudice the Obligor from any of the obligations
under this indemnity or prejudice or diminish the obligations in whole or in part, including in
law, equity or contract (whether or not known to it, or to Bank of Maharashtra).
74

(vii) This Indemnity shall survive the Agreement.

(viii) Any notice, request or other communication to be given or made under this indemnity
shall be in writing addressed to either party at the address stated in the Agreement and or as
stated above.

(ix) This Indemnity shall be governed by, and construed in accordance with, the laws or
India. The Obligor irrevocably agrees that any legal action, suit or proceedings arising out of
or relating to any of this indemnity may be brought in the Courts/Tribunals at Mumbai. Final
judgment against the Obligor in any such action, suit or proceeding shall be conclusive and
may be enforced in any other jurisdiction, by suit on the judgment, a certified copy of which
shall be conclusive evidence of the judgment, or in any other manner provided by law. By the
execution of this indemnity, the Obligor irrevocably submits to the exclusive jurisdiction of
such Court/Tribunal in any such action, suit or proceeding.

(x) Bank of Maharashtra/Indemnified may assign or transfer or any part of its interest herein
to any other person. Obligor shall not assign or transfer any of its right or obligations under
this indemnity, except with the prior written consent of Bank of Maharashtra/Indemnified.

IN WITNESS WHEREOF the Obligor has signed these presents on the day, month and year
first above written.

Signed and Delivered on behalf of

----------------------------

By the hand of--------------------------

-------------------,-the authorized official of theObligor.

Notes:
To be stamped as an indemnity bond in accordance with the local stamp laws at the
place of execution.

Relevant authorizations to be collected in case of (a) company certified copy of the
relevant board resolutions, power of attorney, certified copy of the latest
memorandum and articles of association be obtained (b) partnership copy of the
partnership deed together with the registration extract evidencing registration of the
partnership firm, letter of authorization/mandate from the partnership firm authorizing
the execution of documents on behalf of the partnership firm, power of attorney, if
any.

75

Annexure 13
PERFORMANCE SECURITY FORM
(FORMAT OF BANK GUARANTEE (BG) FOR PERFORMANCE SECURITY)
(ON A NON-JUDICIAL STAMP PAPER OF RS.100.00)
TO : Bank of Maharashtra,
Central Office
Lokmangal, 1501, Shivaji Nagar
Pune -411005

WHEREAS _________________________ (hereinafter called the Bidder) has submitted its bid
dated_______ (date of submission of bid) for providing the consultancy services for implementation of
Advanced Approached under Basel II in Bank of Maharashtra in response to Bank of Maharashtras
Request for Proposal ( RFP ) No. ____________________________ (hereinafter called the Bid ).

KNOW ALL PEOPLE by these presents that WE______________(name of bank) of
____________ (name of country) having our registered office at______________ (address of bank)
(hereinafter called the Bank) are bound unto BANK OF MAHARASHTRA (hereinafter called the
Beneficiary) in the sum of Rs.___________/-( Rupees ______________only) for which payment will
and truly to be made to the said Beneficiary, the Bank binds itself, its successors and assigns by
these presents. Sealed with the common seal of the said Bank this _____ day of_______ , 20___.

THE CONDITIONS of this obligation are:

If the Bidder, having been notified, by the beneficiary, as selected for providing consultancy
services for implementation of Advanced Approached under Basel II in Bank of Maharashtra,
during the period of contract fails to provide services or perform obligations in accordance
with the aforesaid RFP and Contract, as bidder;

We undertake to pay the Beneficiary up to the above amount upon receipt of its first written demand,
without the Beneficiary having to substantiate its demand, provided that in its demand the beneficiary
will note that the amount claimed by it is due to it owing to the occurrence of above condition,
specifying the occurred condition.

This guarantee will remain in force up to 24 months plus 45 days from the date of signing the
contract i.e. up to_______(mention date of expiry which should be a minimum of contract period + 45
days), and any demand in respect thereof should reach the Bank not later than the above date.

Notwithstanding any other term contained herein:

a) this guarantee shall be valid only up to _________________ (Insert Guarantee End
Date) whereupon it shall automatically expire irrespective of whether the original guarantee is
returned to the Bank or not; and
b) the total liability of Bank under this guarantee shall be limited to Rs.__________
(Rupees _______________________ only)

Place :

SEAL Code No. SIGNATURE.

NOTE :
1. BIDDER SHOULD ENSURE THAT THE SEAL & CODE NO. OF THE SIGNATORY IS PUT
BY THE BANKERS, BEFORE SUBMISSION OF BG

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