Punjab & Sind Bank. (A Government of India undertaking) Addendum No.1 Dated: RFP No. PSB / HOIT/RFP/127/ dated

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1 Punjab & Sind Bank Addendum 1 (A Govt. of India Undertaking) Where service is a way of life Punjab & Sind Bank (A Government of India undertaking) Addendum No.1 Dated: RFP No. PSB / HOIT/RFP/127/ dated REQUEST FOR PROPOSAL FOR Selection of Vendor for Implementation of Internal Credit Rating System PUNJAB & SIND BANK HO IT Department 21, Rajendra Place, New Delhi

2 Punjab & Sind Bank Addendum 1 (A Govt. of India Undertaking) Where service is a way of life INTRODUCTION : Bank has published the Tender No. PSB/ HOIT/RFP/127/ dated for Request for Proposal for Selection of Vendor for Implementation of Internal Credit Rating System Sr. No. Following amendments have been made by the Bank with respect to the RFP Data Sheet Clause ref Original Clause Revised Clause Bid submission last date and time :00 HOURS Bid submission last date and time :00 HOURS Insurance Insurance Obligations of the Vendor Eligibility cum Technical bid opening date and time :30 HOURS The equipment (hardware, software etc.) supplied under the contract shall be fully insured by the successful Vendor... Eligibility cum Technical bid opening date and time :30 HOURS The whole clause stands deleted Road Permit In case of receiving of hardware to the area where Road Permit is required for transportation of goods, it is the responsibility of the bidder to arrange for the same in advance without any extra cost to the bank. The whole clause stands deleted. Prebid query clarifications attached. Prebid query reply forms a part of Addendum 1 Addendum No. 1 to RFP No.PSB/ HOIT/RFP/126/ Page 2

3 Query Reference No RFP Section (point number) RFP Page Number RFP Excerpt Query Description/Clarification sought Response 1 10 ANXB ANXB ANXB ANXB1 5 6 The system should have the flexibility to allow categorization of Would like to understand the requirement with regards assets into user defined broad classes and subclasses such as to categorization of assets into user defined asset project finance, Commodity finance, real estate, etc. classes and sub classes. The system should be able to provide a description of calculation Expectation of stepwise calculation for audit process steps for audit purposes. We understand that this means the system should host The system should have the capability to define expert judgment, all the three types of models for a specific portfolio. Is statistical and hybrid type of rating models. this understanding correct? System should support the PD modelling methods for corporate exposures for both 12M and Lifetime 1 ANXB1 Rating reports Industry, Company, Facility 44 ANXB Implement Internal Credit Rating System (Functional Scope) Eligibility Criteria Is bank expecting ECL computation tool as a part of the system? The Reports should be clearly defined before the start of the project The solution should be able to support validation techniques, including statistical tools, for the nonretail rating models as per the requirements of working paper 14 of Basel Committee on Banking Supervision (May 2005) or any modification thereof and generate reports for the same for management oversight and effective Please let us know the existing systems in the bank for portfolio management. The system should have the tools to the following: CBS, IRS, Cap calculator, Mail Exchange validate credit rating models on continuous basis. Validation process should enable the Bank to assess the performance of internal rating and risk estimation methods consistently and meaningfully. The validation process should help the Bank to meet regulatory requirements of Regulator. As per our understanding the hardware for the application and database server will be provide by the bank. Please Clarify As per our understanding, the licenses reqd for operating systems and the database software should be provided by the bank as per the vendor's requirements. Request to clarify. As per our understanding data migration is limited to borrower master file. Please Clarify. Please let us know no of rating models required by the bank to be hosted in the system. Credit rating agency will do the rating of old accounts of all the Please clarify whether the bank will provide the required rating models for the financial year , , and data for rating of the old accounts in the template and ascertain PD on basis of above said last 4year credit provided by the vendor in the electronic format. ratings of old accounts. As per points mentioned in "NOTE" on "Page 11", The Bidder should have implemented/have under implementation understand any implementation experienece in Internal Credit Rating System in atleast 1 Public Sector Bank in Commercial bank also will be considered. Kindly India reconfirm on the same. Also request you to consider Global experience. Please clarify whether all the parameters to be made The system should be capable to allow the bank to modify the risk dynamic and configurable with out any dependency on parameters, risk weights, grades, any other model related aspects OEM /SI. Also, please clarify whether any new additional of the models hosted in the system without reverting to the vendor parameters bank would like to add also need to be for customization configurable. Typically primary asset segmentation should be done The system should have the flexibility to allow categorization of by the core banking system. Pl. clarify whether Credit assets into user defined broad classes and subclasses such as scoring model can consume such classification or Credit project finance, Commodity finance, real estate, etc. score system to maintain separate classification of assets. (Sheet Functional (Sheet Functional System should allow unlimited number of users/unlimited licenses (Sheet Functional Existing class categorisation is on basis of guidelines laid down by regulatory authorities. Further subclases are created on basis of banks products.through customisable categorisation, any amendements in said guidelines can be incorporated easily. Customisation will help the Bank to generate various reports as per existing reporting performa. The Bank needs to understand the various calculation steps followed to reach the end result, for deliberations with Auditors. The details of the steps will be disclosed to sucesssful bidder. Yes, the Bank intends to host all three types of credit rating models. No, computation of ECL needn't be part of system, however the system is expected to provide of PDs and LGDs. The same shall be shared with successfuol bidder. Yes,But Hardware (Server and Operating System) details and specification will be shared by the bidder. Database software will be provided by the vendor and operating system software will be provided by the Bank. Further vendor is advise to supply the Hardware details as per OEM requirement. Final objective is to arrive at the credit rating of the borrowers, the Data migration may not be limited to borrower master file. The final data migration strategy will be discussed with the selected bidder. Number. of Rating models cannot be specified, it can increase/decrase depending on the Bank's requirement The bank will provide the relevant data in the electronic format. Yes all the parameters to be made dynamic and configurable Yes all new additional parameters to be added by bank in future also need to be configurable. The rating will be done prior to opening the account in core banking system as such the categorisation is made prior to CBS. Categorisation is on the basis of regulatory guidelines. Unlimited user access and User licenses may lead to As per specification given in RFP clause 6.4 performance issues. Kindly confirm the requirement.

4 Implementation with 6 weeks Please clarify whether Bank is looking at different Flexibility to configure number of rating models rating models for different asset products, Asset Yes (Sheet Functional segments. The system should have the capability to enable the users to define a rating workflow from the user interface. The system should Rating workflow should be defined for the credit rating Both have the capability to modify the workflow at any point in time in module or the asset products? (Sheet Functional future from the user interface. Shouldn t these details be stored in the core banking System should have ability to track and store accountwise The rating system to provide functionality to store historical credit ratings/ application. Storing these details will result in database /customerwise previous credit ratings/ scores and LGD. scores and LGD. (Sheet Functional and performance issues. The Bidder should have implemented/have under implementation Bidder/ OEM should have implemented/have under Eligibility Criteria Internal Credit Rating System in atleast 1 Public Sector Bank in implementation Internal Credit Rating System in atleast. (RFP) India 1 Bank globally. Request the bank to increase the project timeline to at least 6 months. 1) Selection of vendor: T 2) Finalization/customization of rating models T+2 months 3)Rating & Mapping of account as mentioned in the RFP T+3 months 4) Organisation wise implementation and go live: T+5 months Credit rating agency will do the rating of old accounts of all the Will the Credit Rating Agency do the rating offline? In rating models for the financial year ,201516, and what format will the finalized rating be shared with the Yes, rating will be done by vendor and ascertain PD on basis of above said last 4year credit Bidder? ratings of old Accounts. Provide Internal Credit Rating Models for Different Customer Segments Does the Bank have any existing models they want to Rating models will be discussed and shared with successful bidder. host on the System? If Yes, please share the details Provide Internal Credit Rating Models for Different Customer Please share the exact list and number of models need clause Segments for both retail and nonretail segments. Implementation: As part of implementation all data migration (as Where does the data reside currently? Please elaborate Details of data points will be discussed with successful bidders. Data to be and when required) from the existing systems/ manual data entry for which data points the bank expects the Bidder to do fetched from CBS and from the documents of each account. will be done by the bidder. manual data entry Implementation: During Implementation, any new guidelines issued by Regulatory or statutory Body has to be incorporated This is an openended statement and it will not be During Implemention possible for us to estimate the changes. Request the by the bidder in the solution accordingly at no additional cost to bank to drop this requirement. We can agree to deliver the bank.post Implementation signoff any regulatory or statutory Post Implementation signoff Through change request process which shall be these changes to the bank at mutually agreed rates changes in the existing functionality/inversion will be at no defined on mutually agreed terms with successful bidder. through a change request process. additional cost to the bank Implementation: As part of implementation all data migration (as and when required) from the existing systems/manual data entry will be done by the bidder. Bidder is required to provide the Maintenance and support for the solution, software, middleware supplied through this RFP and also any issues related to Integrated Credit Rating System or its integration with the existing solution needs to be supported. An estimate of size of data to be entered manually and time frame within which it needs to be done and number of systems to integrate with? Data size: As per details given in RFP clause 6.4 Implementation time frame: T+3 months (as defined above) Implementation: The Bidder shall install antimalware, antivirus Request the bank to reconsider this requirement as this protection for all devices, such as servers, web/internet gateways, etc. and the same should be regularly updated. generally does not fall into the scope of Integrated Credit Risk systems. Out of Scope of the RFP Implementation: Active Directory should also be implemented on all the servers and devices installed under the Project Application Helpdesk: Creating and Resolving Change requests. Estimate of number of devices to be installed on. Change requests are chargeable. Request bank to specify number of CRs. Active Directory coverage shall be provided by the Bank to Servers and Devices. Post implementation activities shall be discussed with the successful bidder.

5 The functional requirements which are mentioned as customized or not feasible shall be provided to the Bank before the completion of pilot run at no extra cost to the Bank. Need more clarity on this point (a) , 46, 54, 62, 6568, 81 Functional Requirements Functional Requirements Functional Requirements Retail models The Bank shall also have the right to conduct source code audit by third party auditor. The system should allow the data to be uploaded from source systems or using standard input templates such as spreadsheets, flat files etc Scope of Work includes Delivery of Solution and databases The source code is our IP. We would not be comfortable allowing a third party to access it. As an alternative, we will fix any security defects reported by the bank as part of implementation. Please specify the source systems and format of the upload file. Solution allows data to be uploaded from excel, integrates with existing systems and allows inputs from front end. Flexibility to configure number of rating models. Request Bank to specify the number of models. clause Not a functionality of Internal Credit Ratings Solution. Separate ECL Computation tool is available. Request Bank to drop this requirement. Request you to please keep clarify the list of retail models required by bank We request bank to procure the database license as it will be highly cost effective to bank as well Warranty and ATS support will be mission critical 24X7X365 onsite We request bank to remove the support clause for support for software. Proactive and preventive measures are to be 24X7X365 support. a part of the ATS ECL computation need not be done by application. Bank needs the application to compute PD and LGD. Retail rating models will be discussed and shared with successful bidder. Banking hour support required i.e. 10AM to 6 PM.

6 Sl no RFP Section (point number) RFP Page No. RFP Excerpt Query Description/Clarification sought / Request Response Warranty and ATS 17 Can the clauses related to warranty be changed as per mutual agreement? Execution of Agreements/NDA 21 Clause includes line: All expenses and costs for execution of the Contract/Agreement and NDA shall be borne by the successful Bidder. We request the bank to clarify on the expenses Liquidated Damages (LD) and Penalties 23 We request the bank to waive provisions of liquidated damages and penalty Insurance Insurance Obligations of the Vendor 23 We request the bank to remove this clause as this is an RFP for software solution and insurance would not be applicable Clause deleted As per addendum We request the bank addition of following clauses 1) Client Indemnification. Client will defend and indemnify CRIS, its affiliates and their employees, officers and agents from and against any Loss arising from Client s breach of the terms and conditions of the use of the Services or applicable law and regulations as to the use of the Services Indemnity 24 2) Infringement Indemnification Exclusions. The foregoing obligation of BIDDER shall not apply with respect to: (i) modifications to the Software performed by any party other than BIDDER or its agents (unless BIDDER requests that party to make the modification(s)), if the alleged infringement relates to such modification and use of the unmodified version of the Software alone would not be infringing, (ii) specifications or requirements of, or items or information provided or made by Client or Client s agents without the express written consent of BIDDER if the alleged infringement relates to such specifications, requirements, items or information and use of the unmodified version of the Software alone would not be infringing, (iii) combination or bundling of the Software with any products, processes, software, hardware or materials not otherwise provided as part of the Product, if the alleged infringement relates to such combination and use of the Software alone would not be infringing, (iv) the use of a superseded version of the Software, if the infringement would have been avoided through use of the thencurrent version, as long as Software shall have provided Client with a noninfringing version that is functionally equivalent in all material respects Assignment We request the bank to add the following clause Bidder may assign, novate or transfer this Agreement to any of its affiliates or successors to its business Vendor s Liability 25 1) We request limiting the overall liability to the contract value without any exceptions. 2) We request to amend Line 3 as: IN NO EVENT WHATSOEVER SHALL EITHER PARTY OR ITS LICENSORS BE LIABLE FOR ANY INDIRECT, SPECIAL, INCIDENTAL, PUNITIVE OR CONSEQUENTIAL DAMAGES, INCLUDING BUT NOT LIMITED TO LOSS OF PROFITS, TRADING LOSSES, OR LOST TIME OR GOOD WILL, EVEN IF THEY HAVE BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES, WHETHER IN CONTRACT, TORT, STRICT LIABILITY OR OTHERWISE. 3) We request deletion of the following clause All terms and conditions, payments schedules, time frame for implementation, expected service levels as per this Agreement will remain unchanged unless explicitly communicated by the Bank in writing to the bidder. All terms and conditions, payments schedules, time frame for implementation, expected service levels as per this Agreement will remain unchanged unless explicitly communicated by the Bank in writing to the bidder. The Bank shall not be responsible for any judgments made by the Vendor with respect to any aspect of the assignment. The Vendor shall at no point be entitled to excuse themselves from any claims by the Bank whatsoever for their deviations in confirming to the terms and conditions, payments schedules, expected service levels, time frame for implementation etc. as mentioned in this Agreement Cancellation of Contract Ownership of Deliverables 25, We request 1) Provisions to be made mutual and delete: If deductions on account of penalty and liquidated damages exceeds more than 10% of the total contract price." 2) to include as per the provisions of the agreement. Bank shall not have a unilateral right to decide on whether the Bidder performs satisfactorily. After the award of the contract, if the selected bidder does not 3) Delete the following as Client can terminate the contract: perform satisfactorily or delays Execution of the contract, the Thereafter, if the selected bidder does not perform satisfactorily or delays execution of the contract, the Bank reserves the right to get the balance contract executed by another party of its choice. In bank may give a 30 days cure period. this event, the selected bidder is bound to make good the additional expenditure, which the Bank may have to incur to carry out the bidding process for the execution of the balance of the contract capped up to a maximum of 50% of the Price quoted by the bidder of the undelivered portion of services. This clause is applicable if for any reason the contract is cancelled. We request addition of following clause 6. Proprietary Rights All the deliverables as per scope of this RFP will become the 6.1 Client acknowledges that BIDDER is the exclusive owner of all title and interest in the Services including, without limitation, property of Punjab & Sind Bank, provided, however, there will (i) the Software and any related Documentation; not no transfer of ownership of the bidder s intellectual (ii) any Releases, Software Updates, Software Upgrades and any other corrections, modifications, enhancements and derivative and collective works thereof; property rights contained in such deliverable. However, any (iii) any other software or materials owned by BIDDER and provided to Client under this Contract; customization done specifically for the bank by the bidder (iv) any logos, trademarks, brands, brand features and other identifiers (BIDDER Brands); (collectively, BIDDER Materials), regardless of any participation, suggestion or collaboration by Client in the during the tenure of the contract will be the intellectual design, development or implementation of any such BIDDER Materials, and that BIDDER and its licensors are the owners and holders of all copyrights, and patent, trademark, trade secret and other property of the bank proprietary rights in the BIDDER Materials (collectively, Proprietary Rights), and reserve all such Proprietary Rights to themselves. Client only has limited licence to use the relevant BIDDER Materials in accordance with this Contract Transfer of certain Agreements Contract Period We request the bank to remove this clause We request to delete the following as contract already provides for termination (refer clause 7.23): The Bank reserves the right to terminate the contract at its sole discretion first providing a 30 day cure period and thereafter giving 90 days notice without assigning any reasons. On request by the Bank or its nominated vendor, the current vendor shall effect such assignments, transfers, innovations, licenses and sublicenses in favour of the Bank or its nominated vendor, in relation to any equipment lease, maintenance or service provision agreement between existing vendor and nominated vendor, and which are related to the services and reasonably necessary for the carrying out of replacement services. The Bank and its appointed nominees shall have the right of Access to Premises where the assets are hosted or from where services are being provisioned. The Title of ownership and risk of goods supplied under this contract will be passed on to the bank on delivery of the Title of Ownership 27 We request the bank to remove this clause as it is not applicable to current SOW material at the banks location. We seek clarity on: 1) Whether the Independent Monitor (IM) will give prior notice of such inspection. 2) such right will be valid only during the validity of the agreement? Integrity Pact 3) who will bear the costs towards such inspection being conducted by IM? Payment Terms 27 2) We suggest deleting: 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. And provisions of Recovery o Road Permit 30 Not applicable as hardware not part of SOW Clasue deleted As per addendum Termination 30 to 32 The Bidder is having no right to terminate. 1) Under clause we request to delete: However, the Successful Bidder shall continue performance of the Contract to the extent not terminated when the value of the liquidated damages exceed 10% of the contract amount. 2) under clause we request to delete: after deducing SLA penalty/liquidated Damages, if any. In case, the termination occurs before implementation in all the locations in terms of this clause, the Bank is entitled to make its claim to the extent of the amount already paid by the Bank to the Bidder. 3) We suggest deleting clause Exit Option and clause Termination for convenience 4) We suggest making clause , and mutual and including the below: Bidder may terminate: (a) the Contract upon 7 days prior written notice to Client if Client materially breaches any licence restrictions set forth in this Contract or BIDDER s intellectual property rights in the Service or BIDDER Materials, and such breach is not cured by Client within the notice period stated afore; (b) on written notice, should BIDDER s rights to receive and/or distribute any third party software or material be terminated which would affect provision of Services under the Contract. A termination of this Contract shall not limit a party's rights as shall have accrued up to the effective date of termination (for the avoidance of doubt, where BIDDER terminates under this clause, Client s licence to use the Software and the right to receive related Services shall terminate). Post termination. (a) Where the termination applies to an Contract under which Software was supplied and that Contract is terminated by BIDDER under this clause, BIDDER will refund to Client the applicable Fees for the affected Services that the Client has paid in advance as relate to the period following the effective date of termination, provided that when the affected Services comprise Software license, BIDDER will refund to Client the Fees actually paid by the Client for the Software, depreciated on a straightline basis over the shorter of the term of the licence to the Software under the Contract or four years. (b) Where the termination applies to Services,Client shall pay to BIDDER the applicable Fees and other payments as shall have accrued until effective date of termination. (c) Further, upon termination of any Contract, or this Contract generally, by BIDDER Client shall (i) cease all use of the applicable Products provided under the applicable Contract; and (ii) expunge the relevant Software and any portion or copies thereof from all of Client s electronic storage systems. At BIDDER s request, Client shall certify to BIDDER in writing that Client has fully complied with this requirement. Notwithstanding the restrictions set out in this clause, Client may retain those portions of the Product that are necessary for statutory audit requirements and/or regulatory compliance purposes. For the avoidance of doubt, on termination of the relevant Contract, Client shall cease all access to, and use of, the Product including those portions of the deliverables under the Contract and/or Product it retains as expressly permitted in the immediately preceding sentence.