The above diagram represents the energy band of unbiased PN junction at equilibrium.

When the P-N junction is formed the holes from P-region migrate into the valence band levels on N-side & vice-a-verse. This caused shifting of EFP & hence of entire band structure of P-region upward conversely the N-region band structure shifts downwards as shown in fig. This shifting continues till the energy level EFB & EFN are equalized. When they become equal, the carrier migration stops & equilibrium condition is attained. The energy level on both side band as shown. Each side takes up a different electrostatic potential. It results in potential barrier VO.

As the diffusion of holes & electrons takes place across the junction, they neutralize each other at the junction & produce a free space called depletion region. The negative immobile ions are produced in P-region & in the same way positive immobile ions are in N-region. The further diffusion of majority carriers is presented due to the potential barrier.