The non-banking firms include primary dealers, dedicated gilt funds, mutual funds, insurance companies and some financial institutions, an RBI statement said.

The decision to permit these firms to undertake such transactions, or repos, was taken in the central bank's April credit policy, following the recommendations of the Second Narasimham Committee.

The 35 entities are: Canbank Mutual Fund, Export Credit Guarantee Corporation of India, Exim Bank, GIC, GIC Mutual Fund, Indian Bank Mutual Fund, ICICI, IDBI, ITC Thread Needle Mutual Fund, LIC, Nabard, National Housing Bank, New India Assurance, Oriental Insurance Company, Reliance Capital Mutual Fund, SBI Mutual Fund, SIDBI, UTI, LIC Mutual Fund, JM Mutual Fund, Birla Mutual Fund, Kothari Pioneer Mutual Fund, Jardine Fleming Mutual Fund, Kotak Mahindra Mutual Fund, JP Morgan Securities, ABN Amro Securities, DeutscheSecurities, Industrial Investment Bank of India, BoI Mutual Fund, Sun F&C Mutual Fund, Prudential ICICI Mutual fund, HDFC, Stock Holding Corporation of India and Sicom.

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.

As per the Government notification dated July 14, the firms can take up ready-forward transactions only at Mumbai in treasury bills of all maturities and dated securities approved by the RBI. "Such transactions will have to go through the subsidiary general ledger accounts with the central bank," the notification stated.

The RBI in its April credit policy allowed non-banking participants to undertake ready-forward transactions in order to facilitate better cash management and help such firms to access short-term funds at a lower rate. The central bank had also allowed mutual funds having dedicated gilts funds to undertake ready-forward transactions. The objective was to widen the repomarket.

The RBI has also lifted the restriction on the minimum number of days for repo trading in line with the Narasimham Committee's recommendations.