Rights seem to have gone wrong in Monday’s market conditions with plunging security prices. Not only Suzlon called off its issue in the high profile case, but India's blue-chip companies, Hindalco and Tata Motors’ rights issues, too have proved to be a big burden for the banks that have under-written them.

The exposure of ABN Amro Bank is $56 million, while Merrill Lynch and SBI have $70 million worth of Hindalco shares.

Deutsche bank holds $12 million and Citi bank has a small exposure of $5 million.

Now that the issue has devolved, all these banks will have to absorb the shares that will be in their account this week.

But the Hindalco stock price came down from 96 to 41 on Monday.

When the rights was subscribed at Rs 96, the SBI share of the rights issue was worth $70 million but as of now, with the stock price crashing, they are worth just $35 million.

OP Bhatt, Chairman of SBI said that the bank would book 35 per cent loss on the Hindalco issue.

What are, at such a time, the other alternatives for these banks?

They are left with only two options, to sell the shares at half the amount or to hang on to the shares till they bounce back. That means the banks would have to announce a mark to market loss, next quarter, until the shares are sold.

In case of the Tata Motors issue as well, the under writers, JM Financial, had to take a big loss.

Though its not yet clear as to how much of the issue was sub written, their loss on paper was over Rs 1000 crore.

With Suzlon withdrawing the rights issue on Monday, there are many companies who would be forced to go slow on fund raising and ultimately on expansion.

This also clearly indicates that banks ahead will be under pressure if they continue to under write fresh issues.