A rights issue is a type of corporate action that enables you, as a current shareholder, to purchase extra shares in proportion to your existing holdings, generally at a reduced price.
You will receive rights entitlements (REs) in your demat account as an eligible shareholder, which you can use to apply for the rights issue or trade on the market. However, if you neither sell nor use the REs for the rights issue, they will eventually expire and become worthless. To learn more about REs, see Rights Entitlements (RE) - FAQs.
To learn more about rights issue and other corporate actions, visit zerodha.com/varsity/chapter/five-corporate-actions-and-its-impact-on-stock-prices.