The vast majority of fresh college graduates in India are, to use the industry term, "unemployable".
Their academic courses with outdated syllabi have not prepared them to hit the ground running in their first job, and freshers will typically spend months to years learning on the job, initially in formal training periods and later as "junior resources". During this time they are not wholly productive (and sometimes not even billable to end clients).
Companies incur many hidden costs when taking on freshers, which is a temporary investment that they seek to offset with the low starting wages paid to freshers over the next few years.
("Fresher" is an Indian English word for a first-time employee, typically straight out of college.)
For this to succeed, organizations need the fresher to:
1) Actually join the company
After HR has spent time and money on the recruitment process, they want you to actually join. Offers are rolled out months in advance, and in some streams around 30% of freshers just don't show up on the first day of work. As you can imagine, this makes HR's job very tough.
Recruiting a replacement would take months, and arranging for an induction training programme works best with economies of scale when a large batch joins together.
So HR gives out extra offers, but sometimes this leads to the opposite problem - more candidates join than are needed.
The costs of recruitment can also be surprisingly high - for example, last year even in the downturn, an IIM (Indian Institute of Management) billed my company around ₹1,50,000 as the fee to participate in final placements and hire one candidate.
2) Attend training seriously
Some freshers will lie about their immediate plans and take up jobs as an interim measure - while preparing for competitive exams, to while away the time until their planned wedding, until their foreign university starts, etc. They never intend to stick around in the role. Needless to say, they might not take the training process seriously. The company tries to get some leverage here, by asking to retain original degree certificates and marksheets, etc.
3) Stay with the company till the costs of training are recouped
It is a known fact that the highest wage increases in a fresher's career are obtained by switching jobs. 30% pay hikes are par for the course when switching jobs at a junior level; in the first ten years or so. From day zero, HR wants you to not leave their company before their costs are recovered. They may ask the fresher to sign a monetary "bond" to recover the training fees if you leave soon.
4) Resign in an orderly fashion, after serving the proper notice period
Employment contracts in India have notice periods of one to three months. Some freshers tend to quit without notice, by just not showing up for work. After a week or so the employer is left to assume they will not be joining back. This again creates planning and staffing difficulties, and so the company will threaten to withhold relieving and experience letters unless the leaving formalities and niceties are observed.
Needless to say these common practices like retaining original marksheets, signing bonds, having lengthy notice periods and refusing to provide proof of employment, range from borderline abusive to outright illegal. Unfortunately, Freshers are a commodity for HR. The large number of fresh college graduates every year skews the employer-employee power equation in India, making such practices commonplace at the entry level.
To answer the specific question about delaying offer letters:
If HR gives a fresher an offer letter, the fresher will use it to shop around and get another higher-paying offer. In the eyes of HR, having an offer letter that the fresher can show to other companies itself reduces the probability that the fresher will show up on the joining date.
Of course this is a terrible justification, and not a practice a reputable company should follow. Whether you wish to be associated with such an abusive company or not depends on your options and position in the job market.