What is a Right Entitlement?
Temporary demat securities that signify your eligibility to apply for the rights issues are known as Right Entitlements (REs). REs aren’t right shares themselves, and are required to be used to apply for the rights shares.
A right is issued by a company to its shareholders on a predetermined date called the record date. Rights entitlements are offered to shareholders as a ratio to the number of securities held on this record date. A shareholder may refuse to subscribe to the rights issue and just let the 'right' lapse. Alternatively, the shareholder can renounce/trade the entitlement in favour of another person for a price. The fact that you have rights entitlements does not automatically entitle you to rights shares. You will need to apply for rights shares based on entitlements received.
REs don’t reflect in your demat account until the RE trading period begins. Also note that you will not be allowed to transact REs intraday as they are settled on a trade-to-trade basis.
To know more about Rights Issue, get the SEBI FAQs here, NSE FAQs here and BSE FAQs here.