An agreement to this effect was signed here on Thursday between the multilateral agency and the Department of Economic Affairs, Ministry of Finance, an official release said.
The credit will come from the International Development Association (IDA) the World Bank's concessionary lending arm. The maturity period will be for 25 years, including a five-year grace period.
The project aims to improve skills of urban local bodies (ULBs) for better urban management, thereby reducing poverty.
This will help states and at least 20 ULBs in the initial phase to improve systems for financial management, urban planning, service delivery and better governance.
Besides, it will provide support at the central and local levels for policy formulation, implementation and monitoring, in the area of urban poverty alleviation.
This will be with special focus on building-up information systems, fostering knowledge, information exchange and learning to promote community participation in implementing urban poverty alleviation programmes.
Through this project, the union government will set up a Challenge Fund which will recognise innovative practices by ULBs on urban poverty alleviation.
It will also constitute a network of practitioners that will include government officials from select ULBs, academics and other actors active in the area of urban poverty alleviation both nationally and internationally.