CCI clears NABARD and Infosys of cartel and dominance abuse in CBS RFP
The Competition Commission of India has dismissed allegations that National Bank for Agriculture and Rural Development (NABARD) and Infosys Limited entered into an anti-competitive arrangement or misused dominance in connection with a Request for Proposal (RFP) for Core Banking Solution (CBS) services for Rural Cooperative Banks (RCBs).
The case, Natural Support Consultancy Services Private Limited Vs National Bank for Agriculture and Rural Development, was decided under Section 26(2) of the Competition Act, 2002, with the Commission concluding that no prima facie violation of Sections 3 or 4 was made out.
Background of the information filed
Parties involved
- Informant: Natural Support Consultancy Services Private Limited (NSCSPL), a company engaged in software and IT-related services, including design, development, customization, implementation, maintenance, mobile applications, and allied solutions.
- OP-1: National Bank for Agriculture and Rural Development (NABARD), a statutory body constituted under the NABARD Act, 1981, responsible for providing and regulating rural credit and promoting integrated rural development. Among its institutional development roles, NABARD acts as mentor and facilitator for implementation of CBS in RCBs.
- OP-2: Infosys Limited, a multinational IT services company offering, among other things, banking software solutions such as the Finacle CBS platform.
The information was filed under Section 19(1)(a) of the Competition Act, 2002, alleging contravention of Sections 3 and 4 by NABARD and Infosys.
Earlier CBS procurement and empanelment (2011 RFP)
NABARD issues RFPs on behalf of RCBs to identify vendors who can provide CBS solutions. CBS is a centralized software environment that enables banks to manage core operations such as accounts, payments, and transaction processing. To deliver CBS, two roles are typically involved:
- Original Equipment Manufacturer (OEM) – owner and licensor of the CBS software; and
- System Integrator (SI) – primary bidder responsible for implementation, integration, maintenance, and support.
In 2011, NABARD issued a Request for Proposal titled:
“Request for Proposal-Identification of OEM/Product Vendor/Sl for implementing Core Banking Solution-Based on Application Service Provider (‘ASP’) model–across 140 Cooperative banks across the nation”
vide RFP No. NABARD\Repo Cell\CBS\RFP\2011\001 dated 30.08.2011 (2011 RFP). Following this RFP, NABARD empanelled two combinations:
- Infosys as OEM with Wipro as SI; and
- Tata Consultancy Services Ltd. (TCS) as both OEM and SI.
The initial arrangement with the consortium of Infosys and Wipro was for five years. According to the Informant, this contract was renewed multiple times by NABARD until 31.12.2022. Subsequently, Wipro opted to exit the arrangement, but the use of Infosys’ Finacle CBS continued beyond the tender period by conduct, extending operations with the same OEM (Infosys – Finacle) up to 31.12.2023 and thereafter.
The 2023 RFP and the core grievance
Fresh RFP for Finacle upgradation (2023 RFP)
On 27.10.2023, NABARD, acting on behalf of participating cooperative banks, floated another RFP:
“Request for Proposal (RFP) for identification of application service provider for migration/upgradation of Core Banking Solution from Finacle 7.x to Finacle 10.2.25 and maintenance for 5 years-based on Application Service Provider (ASP) Model-across 58 Cooperative Banks in 9 States (through GeM Portal)”
vide Ref. No. NB.HO.SPPID/867/SPPID-28/2023-24 (2023 RFP).
This RFP was specifically framed for:
- Migration from Finacle 7.x to Finacle 10.2.25, and
- Five-year maintenance under an ASP model for 58 cooperative banks across 9 States.
NABARD later informed the concerned RCBs, by email dated 06.03.2024, that M/s Dynacons Systems and Solutions Ltd., leading a consortium with Xtranet Technologies Pvt. Ltd. and Best of Breed Software Solutions, had emerged successful in the bidding process. These entities were selected to provide services related to the Finacle-based CBS – essentially migration, operations and maintenance support – not to deploy a separate or competing CBS platform.
Allegations by the Informant
The Informant’s complaint centred on two broad sets of allegations: