B-School students may have to surrender their credit cards if the Reserve Bank of India goes ahead with its draft guidelines on credit card operations. The guidelines have recommended that credit cards should not be issued to persons, including students, with no independent financial means.

ICICI Bank issues affiliate cards to students at the Indian Institute of Management (Ahmedabad), S P Jain Institute (MR), Xavier's Labour Relations Institute (XLRI) and Amity Humanity Foundation. Citibank has MTV Citibank Card for the youth, including students.

It is an independent card. However, in some cases, this has been issued as an add-on card. Now, the banks may have to suspend the operation of these cards.

According to an ICICI executive, cards are issued to IIM students as they are seen as capable of getting well-paying jobs. He points out that this segment has a lot of potential -- cards issued to students now represent only around 0.01 per cent -- of the total card portfolio.

"The changing profile of the Indian youth has given banks a major source of business," says a credit card head of a private sector bank, adding: "The restrictions will affect the promotion of plastic money in India."

"Banks are in the business to take risk and if a bank has good risk management systems in place it should not be a problem with the regulator," says an executive in a public sector bank.

The RBI guidelines also said that add-on cards -- subsidiary to the principal card -- can be issued with the clear understanding that the liability would be that of the principal card holder.

Card issuing banks are up in arms against the RBI recommendation as they fear adverse impact on their business. The Indian Bank's Association, the premier banking body, is also likely to raise the issue with the RBI.

The regulator has also recommended setting up of a credit limit for an individual credit card holder irrespective of the number of cards one holds.