The Treasury Department did not name the banks but many of them are likely to announce they are making repayments and their names eventually will be published in routine Treasury reports. Many banks have chafed at the restrictions on executive pay that accompanied the capital injections. Eight of them were pressed by the US Treasury to take government funds in late October at the height of the crisis.

Permitting some banks to repay money to the government’s Troubled Asset Relief Program, or TARP, effectively initiates a process of separating stronger banks from weaker ones as the financial sector begins to regain its balance.

Some banks remain on government life support, which makes them subject to the pay restrictions. Others complained they did not need the help and were being put at a competitive disadvantage because they couldn’t set their own pay levels.

In return for investing bailout funds in banks, the government received dividend-paying preferred shares and the repayments that banks now are approved to make will go toward repurchasing those shares. Banks that repay their preferred stock have the right to repurchase warrants that the Treasury holds in their firms at fair market value. The warrants give the government the right to buy common stock at a predetermined price for up to 10 years and are intended to give taxpayers a chance to share in the profits of healthy banks.

“These repayments are an encouraging sign of financial repair, but we still have work to do,” Treasury secretary Timothy Geithner said in a one-page statement. Geithner has said that money paid back into the $700-billion bailout fund by healthy banks can be reused to help smaller banks, including those that have already gotten one bailout.

As a condition of being allowed to repay the rescue funds, banks had to show they could raise money on their own from the private sector both by selling stock and by issuing debt without the help of FDIC guarantees. In addition, the Federal Reserve had to agree that their capital levels were adequate to support continued lending.