I was shocked when I first read this that if you want a credit card you first need to open a FD with the concerned bank. At present this is just related to few banks including ICICI Bank the biggest credit card issuer in India.
This is mainly because of increase in defaults done by credit card users.
In case of ICICI the biggest credit card issuer, has made it conditional for some of the credit card applicants, who do not meet the bank's eligibility criteria, to open FDs under a scheme called Fixed Deposit Instant Credit Card.
Axis Bank has also launched such a scheme.
In this scheme, banks ask applicants to open an FD account with an auto-renewal facility. The minimum amount is Rs 20,000 and the maximum Rs 300,000. The credit limit on the card is pegged at 85 per cent of the FD amount.
The bank then marks a lien on the entire fixed deposit amount. This means the depositor cannot break the FD as long as he holds the card. Only the interest can be withdrawn.
If the cardholder fails to pay the outstanding amount on the credit card within 90 days from the date of the statement, the bank has the right to liquidate the FD and set off the credit card charges against it. Source