New Delhi: India is negotiating with the World Bank for an urban infrastructure fund worth $500 million to progress the Jawaharlal Nehru National Urban Renewal Mission (JNNURM), to modernise 63 cities.

Sources in the Urban Development ministry said the World Bank had approached the Planning Commission for the fund, which would require Cabinet approval.

Larger cities could be able to access more funds as they were more credible financially. The credit rating of the mission cities would be over by October.

The ministry is also in talks with banks and financial institutions for financing the urban infrastructure at subsidised interest rates.

A review of the mission, which comprises projects worth about Rs 26,500 crore found that India lacked the contracting capacity to undertake and execute these projects.

Cities have been reporting constraints in the execution capacity and there is a need to attract large engineering firms to ensure timely execution of projects the reviewers said. They also suggested a subsidised interest rate regime for projects undertaken by the mission, especially by banks and financial institutions.