So far as student internships for MBA students are concerned, it all depends up on the nature of internship.If it is summer internship as part of academic curriculam, some companies pay stipend and some may not.
If the internship is post academic i.e after completion of their graduation, it is advisable to pay some stipend to attract good talent as the students are serious about learning the skills and can add value to their work.
Secondly, the company also stands the chance of retaining a bright and talented intern for a permanent role which saves the company's recruitment costs.
Thirdly, the intern will develop a favorable disposition to continue in the company.
Fourthly. it motivates the interns to work hard for their skills.
Fifthly it helps the interns to fund some short term programmes on their domain related skills.
Sixthly it helps employer branding.
HR & Labour Relations Adviser
Internship can be a strategic tool for recruiting quality freshers with potential to grow.
Successful internship programs can expand/widen candidate reach and help to compete for top talent—ultimately improving recruitment results and strengthening the team with fresh blood and talent.
All good companies will pay stipend during internship but no such law to my knowledge.