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					            DENA BANK INVITES EXPRESSION OF INTEREST
         FOR PROVIDING CONSULTANCY ON RISK MANAGEMENT

The Expression of Interest document is presented in following pages for
interested parties to download.

Responses to Invitation for Expression of Interest should be submitted in
duplicate in sealed envelopes addressed to General Manager (IT & IRM) at
Dena Bank Head Office, Dena Corporate Centre, C-10, G Block, Bandra Kurla
Complex, Bandra East, Mumbai 400 051 before 4.00 PM on 3 rd January 2006.
Offers received after the specified date and time will not be entertained.

The Bank will issue Request for Proposal at a later date only to parties
shortlisted after evaluation of Expression of Interest.

The Bank reserves its right to reject any or all of the responses to Invitation
for Expression of Interest received without assigning any reasons.


General Manager
Information Technology &
Risk Management

23rd December 2006




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                                Dena Bank
   Consultancy Services for an Integrated Risk Management Framework
                 Request for Expression of Interest [EoI]

0.000   Information on the Bank:

0.001   Dena Bank, founded in May 1938 is now a leading listed bank and is a
        Government of India enterprise. The Bank had 1122 branches as at 31 st
        March 2006 (1122 as at 30th June 2006) including 98 satellite offices
        spread over 21 states and 3 Union Territories. Of these, 518 branches
        were located in Gujarat, 249 in Maharashtra and 74 in Chhattisgarh. The
        Bank had presence in almost all major cities / towns elsewhere. Of the
        1122 branches, 491 (including 98 satellite offices) were located in rural
        areas, 191 in semi-urban, 236 in urban and 204 in Metro areas. The Bank
        does not have any branch outside the country. The Bank has 37 authorized
        dealer branches to undertake forex related business. The Bank has also
        set up 5 Asset Recovery Branches to focus on recovery efforts in large
        NPA accounts. The Bank has set up over 50 FINMARTS for marketing of
        its retail products and services.
0.002   The Bank has a large bouquet of products and services to offer its
        customers. Apart from traditional asset & liability products and ancillary
        services like Safe Deposit Vaults, the Bank also has a number of Retail
        Banking schemes for housing loans, consumer durables, educational
        loans, mortgage loans etc. The Bank also offers its services in the form of
        Credit cards, ATM cum Debit cards, Kisan Credit Cards, Dena Laghu
        Udyami Credit Card, Dena General Credit Card etc. The Bank also had a
        special deposit scheme Dena Alpa Bachat Katha aimed at financial
        inclusion. The Bank has been active in corporate credit, agricultural credit,
        SME & SSI loans, retail credit and export credit. The loan book of the bank
        is well diversified covering a wide of sectors / industries of the economy.
        The Bank also offers non fund business like Letters of Credit, Guarantees
        etc. The Bank also distributes third party products like insurance (both life


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        and non-life) and mutual funds. The Bank had entered into a number of tie-
        ups for this purpose.

0.003   The balance sheet size of the Bank as at 31st March 2006 was Rs
        26545.33 crores (Rs 24028.59 as at 31st March 2005). The assets of the
        Bank included a loan book of Rs 14231.24 crores (Rs 11308.59 crores in
        previous year) and investments books of Rs 8570.67 crores (Rs 9696.95
        crores in previous year) (figures are on net basis). The fixed assets of the
        Bank stood at Rs 460.53 crores as against Rs 293.27 crores in previous
        year. The Bank has posted operating profits in all years since its inception.
0.004   Organisationally, the Bank has a three tier structure with Corporate Office
        at Mumbai, 18 Regional Offices and 1122 branches. The Regional Offices
        play the role of first level of control structure. In view of the large number of
        branches in Gujarat, the Bank has opened a general Manager’s Office in
        Gujarat to control and coordinate branches in the state.
0.005   All branches of the Bank are computerized (partial / fully computerized, on
        stand alone basis) covering 98.3% of its business. The Bank has so far net
        worked 955 of its branches through its intranet facility, dial-up modem lines
        etc.
0.006   In keeping with the universal trend of introducing ATMs as the most popular
        and convenient mode of delivery channels, a total of 240 ATMs have been
        installed all over the country as at 31st March 2006 and more ATMs are
        being added regularly. As of 31st March, 2006 the installation base of 240
        ATMs covered 110 centres including 42 at offsite locations. Since then 15
        more ATMs are in the process of installation in April 2006.
0.007   The Bank is a member of VISA, thus facilitating the Bank’s cardholders to
        access their accounts from more than 1,00,000 Merchant Establishments
        (MEs) and VISA ATMs, all over India and more than 13 million MEs and
        890,000 ATMs, internationally. In all 312 branches covering more than 100
        centres have been technologically enabled to issue ATM / Debit cards.
        Apart from any VISA enabled & POS terminals, these cards can be used at
        any of the Corporation Bank ATMs, SBI ATMs as well as ATMs belonging

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        to CASHTREE / CASHNET group of Banks. The Bank has recently joined
        National Financial Switch initiated ATM sharing arrangement. The Bank
        has a number of value added services over the ATMs like, Mobile Pre-paid
        Top-up. Any Branch Banking & Multi-City Cheque Facility has been
        introduced at 138 branches across 50 centres.
0.008   In order to meet the emerging challenges in the banking arena,
        implementation of Basel II accord and risk management as well as
        customer focus in mind, the Bank has embarked upon a very important and
        strategic endeavor of conceptualizing and implementing a state of the art
        ‘Core Banking Solution’ (CBS). Apart from the basic core Banking solution
        the Bank is also proposing to implement a boutique of third party
        applications which will change the way we Bank, keeping in mind the
        customer need. A host of third party applications are also slated for
        implementation as part of core banking that includes Risk Management
        (from M/S SAS), ALM (from M/S Oracle Corporation), Integrated Treasury
        Management (Credence Solution) etc. The Bank is adopting a complete
        end to end Outsourcing model with a 10 year contract period and has
        planned to rollout 850 branches under CBS environment in the next two
        years.
1.000   Introduction:
1.001   Dena Bank [hereinafter called “The Bank” or “Bank”] intends to have
        consultancy services for developing and implementing an enterprise wide
        integrated Risk Management Framework covering Credit, Market &
        Operational Risks to comply with Basel II norms & RBI guidelines and for
        benchmarking the proposed framework, systems & procedures etc against
        international best practices in Banking and implementing across Bank-wide
        units.
1.002   The Bank invites reputed consultants satisfying the prescribed eligibility
        criteria to indicate their interest in providing their services.
1.003   Consultants having required capabilities and ability to deliver the Bank’s
        requirements alone need to apply.

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2.000     Scope of Work:
2.100     Diagnostic Study & Gap Analysis:
2.101     To conduct a Diagnostic Study and Gap Analysis followed by formulating
          and implementing Credit, Market & Operational Risk Management
          Frameworks and also a Framework for enterprise wide integrated risk
          management to comply with Basel II norms & RBI Guidelines and
          benchmarked against the international best practices and achieving the
          following objectives:
         Review of Policies, Processes and Organization Structure pertaining to
          credit, market & operational risk management;
         Adopting Simplified Standardized Approach for Credit, Duration cum
          Maturity Approach for Market Risk & Basic Indicator Approach for
          Operational Risk Capital computation by March 2008 and suggesting ways
          of optimizing capital requirements;
         Recommending a          MIS Framework, which will enable the Senior
          management to take decisions based on the risk taken in terms of Credit,
          Market & Operational risks involved;
         Introduction of Comprehensive RAROC approach and transfer pricing
          mechanisms;
         Framework for preparing the bank for Risk based Supervision by Reserve
          Bank of India including comprehensive risk profiling of the Bank, tools for
          aggregation of risk assessment on enterprise basis and strengthening the
          risk based internal audit process;
         Introduction of Internal Capital Adequacy Assessment Process for Credit,
          Market and Operational Risks separately; and
         Road map & Framework for Economic Capital computation from the
          Regulatory Capital computation.


2.200     Credit Risk Management:




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      Review of Policies, processes and Organization Structure pertaining to
        Credit Risk Management;
      Adopting Simplified Standardized Approach for Credit Risk Capital
        computation by March 2008 and suggesting ways of optimizing capital
        requirements;
      Road map for credit risk to migrate from standardized to Advanced Internal
        Ratings based Approach through Foundation Internal Ratings based
        Approach in a time-bound manner;
      Rating Migration Analysis including the data base needs, model building
        etc and calculation of segment wise Probability of Default, Exposure at
        Default and Loss Given Default parameters;
      Extension of the present Credit Rating Model of the bank to cover all
        exposures of Rs 2 lakh and above;
      Formulation of industry wise credit rating models at least for industries
        with major exposures and separate scoring models for the major
        segments like Retail & SME ;
      Identification of core areas of risk origination from credit risk perspective
        covering on and off balance sheet exposures;
      Framework for Risk based Pricing, Risk based delegation of credit approval
        authority, Risk based credit review process etc;
2.300 Market Risk Management:

      Framework for Cost to Close Analysis for efficient Funds / Liquidity
        Management;
      Framework for introduction of VaR analysis, Back-testing etc to cover
        State Government Securities, non-SLR portfolio including Equities & Forex
        Exposures and integration VaR as part of decision making process in
        Treasury;
      Framework for Stress Testing and Sensitivity Analysis in Investments
        Portfolio including Forex Operations;




________________________________________________________________________          6
         Framework for introducing Hedging for market risk by way of derivatives
           handling;

         Revisiting the Bank’s existing Credit Rating Model for non-SLR
           investments;
         Framework for establishing a separate Market Risk Management unit and
           strengthening of Mid-Office/s; and
         Framework for migrating to VaR based Approach of capital allocation for
           market risk.
2.400 Operational Risk Management:
         Framework for Improvements in Identification of core areas of operational
           risk origination, Assessing, Controlling, Monitoring and Mitigation of
           Operational Risk;
         Identification of core areas of risk origination from an operational risk
           perspective;
         Road map for operational risk to migrate from Basic Indicator Approach to
           Advanced Measurement Approach through Standardized Approach in a
           time-bound manner; and
         Framework for the data base needs, model building etc for capture,
           collation and analysis of data on Potential and Actual Loss Events to
           facilitate migration to Advanced Measurement Approach.
3.000     Eligibility Criteria:
3.001     The eligibility criteria for the consultants to participate in the bid process are
          as follows:
         The Consultant should have experience in developing & implementing
          credit, market, operational risk management frameworks and Integrated
          Risk Management system in at least one Bank in India [Private/Public] of
          comparable size (i.e. with a branch net work of around 1000 branches and
          a business-mix of at least Rs 40,000 crore) or at least in 2-3 international
          financial institutions / Banks, preferably abroad.




________________________________________________________________________                  7
      The Consultant should involve international experts in the consultancy
        process and modeling.
      The Consultant should have a sizeable team [at least 100 experts with
        domain knowledge in various aspects of risk management / financial
        services
      The Consultant should have knowledge of the latest developments in the
        industry in managing credit, market & operational risk including Basel II
        norms, Regulatory guidelines applicable to banks operating in India and
        international best practices.
      The Consultant should be of international repute, and should have
        sufficient expertise in related areas like process re-engineering, internal
        audit including risk based internal audit, and quantitative modeling in
        Banks.
      The    Consultant    should      have   ready-to-deploy   tools/framework     for
        benchmarking against international best practices and exhaustive coverage
        of Basel II requirements. The Bank is procuring the requisite software (as
        detailed elsewhere) through a separate selection process and out of scope
        of this EoI. Software vendors who would like to provide consultancy
        services may be eligible consultancy subject to their fulfilling the eligibility
        criteria as stated in this document and as per the CVC guidelines.
      The Consultant should have complete understanding of Basel II and RBI
        Guidelines.
      The Consultant should have the capacity to execute the project through out
        the implementation cycle.
      The Consultant should be a profit-making firm for the last two years, and
        should’ve an annual turnover of minimum Rs 25 crores in each of the last
        two years (i.e. financial years 2004-05 and 2005-06 or calendar years 2004
        and 2006 as per the published accounts of the consultant).
      The Consultant should enclose documentary proof of all the above criteria
        along with their technical proposal. Proposals of Consultants, which do not
        comply with the above, will be rejected without assigning any reasons for

________________________________________________________________________              8
            the same. Bank reserves the right to amend the criteria without information
            to the consultants and at any stage of selection.
4.000       Deliverables:
The Deliverables from the Scope of consultancy as defined hereinabove will cover
            the following, among others:
               A detailed report on the findings from Diagnostic Study and a Gap
                Analysis Report from a credit & operational risk perspective that should
                cover the existing governance structure, policies, procedures, and
                systems. The Gap Analysis report for migration to increasingly more
                risk sensitive approaches for credit, market and operational risk for
                capital allocation should be separate and should address the issues
                separately, in detail.
               Hand-on assistance to the Bank in addressing the gaps by designing
                new processes & policies, wherever needed.
               Assistance to the Bank in re-organizing the Risk Management
                Department at Corporate level and requisite structure at the level of
                Controlling Offices; creation of a separate cadre of Risk Managers; and
                provide necessary training to Risk related personnel and trainers of the
                Bank.
               Assist the Bank in achieving Basel II norms compliance under Pillar I, II
                and III in accordance with the date lines that are / may be set by
                Reserve Bank of India including migration to increasingly more risk
                sensitive approaches for Credit, Market and Operational Risk factors
                for capital allocation.
               Delivery of standard templates for data collection and mapping, and
                training the team from Bank on the usage and applicability of such
                templates to aid migration to        increasingly more risk sensitive
                approaches for Credit, Market and Operational Risk factors for capital
                allocation. Consultant should help the Bank in designing data collection
                templates for estimation of Probability of Default [PD], Loss given



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           Default [LGD] and Exposure at Default [EAD], Operational Risk VaR
           etc
          Assistance to the Bank in designing scoring models [PD] for Basel II
           specified asset classes.
          Assistance to the Bank in conducting a Risk & Control Self Assessment
           [RCSA], which should include identifying risk categories, risk owners,
           controls, control ownerships, and prioritizing risks based on judgment.
          Assistance to the Bank to develop a frame work of Key Risk Indicators
           [KRI] that includes identification, documentation and application of
           KRIs.
          Assistance to the Bank in designing report templates and devise a
           methodology for comparing the KRIs with Loss-event data and
           recalibrating the thresholds kept, wherever necessary.
          Design for a Loss-event Database framework to capture loss events,
           possible loss events and near-miss events with field level description.
          All MIS related templates to address Pillar II & III requirements for
           reporting to Senior Management / Board / Reserve Bank of India.
          Separate road maps for the transition from standardized approach to
           advanced approaches in credit risk and standardized approach to
           advanced measurement approach in operational risk. Consultant
           should also prepare a road map for the transition from regulatory
           capital to economic capital.
          Consultant should develop functional and technical specification
           document for a CRM solution for Capital computation, based on the
           framework and strategy implemented.
          Assist the Bank in designing a comprehensive MIS framework to help
           the management in taking pro-active steps to minimize risks by
           individual business lines.




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               Consultant should develop functional and technical specification
                document for an ORM solution for Capital computation, based on the
                framework and strategy implemented.
               Consultant should develop the functional and technical specification
                documents for Credit, Market & Operational Risk Management
                solutions for Capital computation, based on the framework and strategy
                implemented.
4.002       The above deliverables are only indicative and not exhaustive. For
            completeness, the above list of deliverables should be taken together with
            the Scope of the Consultancy as defined at Para 2.000 hereinabove along
            with sub paras thereunder.
4.003       The information furnished herein is only indicative and must be considered
            only as advance information to assist the prospective bidders to decide
            whether or not to apply for pre-qualification.
4.002       The time frame for providing the solutions shall be mutually decided
            between the Bank and successful bidder.
5.000       Criteria for Shortlisting:
5.001       Detailed Request For Proposal (RFP) will be issued as the next step, only
            to the short-listed parties. The Bank intends to shortlist the interested
            parties based the responses to this Expression of Interest and on the
            following items:
            a) Meeting the eligibility criteria,
            b) Experience in consulting on risk management,
            c) Previous engagements of similar nature,
            d) Understanding of Basel and RBI Guidelines.
5.002       The Bank reserves its right to accept or reject any or all of the responses to
            this Expression of Interest without assigning any reason at its discretion.




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