The REs need to be available in the demat account for the shareholder to be eligible for applying for the rights issue. The RTA will check the demat account for REs during allotment. While applying for rights shares, the RTA asks the investors to declare whether they already have the REs or have purchased it.
To know more about Rights Issue, get the SEBI FAQs here, NSE FAQs here and BSE FAQs here.