Saraswat Co-operative Bank has served a legal notice on i-flex Solutions terminating the contract entered into by the bank with the technology provider for the deployment of the latter's flagship banking software product 'Flexcube'.
Saraswat Bank has claimed a compensation of Rs 255.64 crore the alleged "failure to adhere to contract terms and breach of these terms."
i-flex Solutions officials said they had not yet received the notice and therefore would not be in a position to comment.
In its notice to i-flex Solutions, served by its advocates Little & Co., Saraswat Co-op Bank has claimed that its clients were entitled to recover all the losses arising out of i-flex's failure to successfully deploy the product.
The bank has claimed Rs 20.94 crore as compensation on account of lost infrastructure costs, Rs 10.24 crore due to lost manpower and delay costs, Rs 2.2 crore as recurring costs and a whopping Rs 220 crore as business opportunity loss. The bank has also demanded the refund of Rs 2.24 crore already to i-flex for the contract.
In May 1999 after Saraswat Co-operative bank, had embarked on a modernising drive and positioned itself as an automated bank, it chose IT services company i-flex to provide it with Flexcube, a complete core banking solution package. The product was supposed to enable the bank to operate through a centralised network, and also computerise its retail, treasury and wholesale banking operations.
The bank claims that prior to it having entered the agreement with i-flex, it was assured that the software system being offered would provide a total solution to the bank's requirements.
The total amount payable under the agreement was Rs 3.5 crore, in several tranches corresponding to milestones in the implementation.
However, the bank claims that the package was not compatible with the Indian banking requirements, and had to be modified as per the contract which i-flex has allegedly been unable to do to the bank's satisfaction.
