State-owned banks State Bank of India (SBI) and Punjab National bank (PNB) have agreed to infuse Rs 500 crore in emergency funding to Jet Airways, allowing the debt-laden airline to continue operations until the airline's lenders resolve debt restructuring, reported The Economic Times, citing sources close to the development.

The fresh debt is proposed to be ranked at higher seniority, which means it will be given first preference in the event of loan recovery, noted the report, citing a source.

Jet Airways on Thursday held an Extraordinary General Meeting (EGM) to seek shareholders' approval for a Bank-led Provisional Resolution Plan (BLPRP) as part of which lenders will become the largest equity owners of the airline.

The banks are likely to convert a part of the debt into 11.4 crore shares by paying a token Rs 1 apiece based on the Reserve Bank of India (RBI) restructuring guidelines, the report said. This, in turn, will give the lenders a majority stake in the company.

The special resolution to allow conversion of loans into "shares or convertible instruments or other securities" comes after Jet Airways Board approved the BLPRP on February 14.