The non-banking firms included primary dealers, dedicated gilt funds, mutual funds, insurance companies and some Financial institutions, the RBI statement said.

The RBI said the decision to permit India's largest mutual fund the Unit Trust of India, the Life Insurance Corporation of India and other non-banking firms to undertake ready forward transactions, or repos, was taken in the central bank's April credit policy.

Earlier these firms were permitted to undertake only reverse repos, which involves purchase of securities with an agreement to sell back at a later date.

"It was however necessary for the Government of India to issue a notification permitting non-banking entities to enter the ready forward market," the statement said.

It said the firms permitted to undertake ready forward transactions is asfollows: Canbank Mutual Fund, ECGC, Export Import Bank of India, GIC, GIC Mutual Fund, Indian Bank Mutual Fund, ICICI, Industrial Development Bank of India, IDBI Mutual Fund, ITC Threadneedle, LIC, Nabard, NHB, New India Assurance Company, Oriental Insurance Company, Reliance Capital Mutual Fund, SBI Mutual Fund, SIDBI, UTI, LIC Mutual Fund, J.M. Mutual Fund, Birla Mutual Fund, Kothari Pioneer Mutual Fund, Jardine Fleming Mutual Fund, Kotak Mahindra Mutual Fund, JP Morgan Securities, ABN AMRO Securities, Deutsche Securities, Industrial Investment Bank of India, BoI Mutual Fund, Sun F & C Mutual Fund, Prudential ICICI Mutual Fund, HDFC, SHCIL, SICOM Limited.