East Delhi Mayor Neema Bhagat rejected the charge and accused him of "politicising" the issue instead of helping the cash-strapped civic body.
"After listening to the mayor's demands, the chief minister said, he has seen the accounts of the East Delhi Municipal Corporation (EDMC) and there is massive corruption in the civic body," a senior government official said.
"Kejriwal said the EDMC must do away with corruption to make it financially stable," the official said.
The senior official said that during the meeting, Kejriwal also sought to know why the sanitation staff were not paid salaries despite the fact that the government has released "all funds due to the EDMC".
Bhagat, when later contacted, said Kejriwal instead of solving issues was "politicising the matter".
"As per the finance commission recommendations' Rs 9,845 crore is due to us in financial year 2017-18 from the city government. We are already suffering due to lack of funds, and unable to disburse salaries of many employees.
"But, instead of solving their problems, he (Kejriwal) accuses EDMC of corruption," the mayor said, adding, the meeting with the chief minister was "disappointing".
She said that during the meeting Kejriwal said that "his government can only release more funds if the Centre gives funds to it."
Bhagat was accompanied by Deputy Mayor Bipin Bihari Singh, Delhi MLA Om Prakash Sharma and two other members.
After the meeting, the mayor told reporters that the chief minister "did not give any assurance on the funding issue and instead asked us to go to the Lieutenant Governor".
During the meeting, the chief minister asserted that the EDMC has many sources of income, but because of "corruption" its finances are in a mess.
Kejriwal said illegal hoardings and illegal parking must be curbed, which will increase the revenue of the civic bodies manifold.
Bhagat also apprised Kejriwal of 25 spots in areas falling under the PWD, which need immediate attention for desilting.
Recently, mayors of North and South Delhi Municipal Corporations had also met the chief minister seeking release of funds which they claimed were due to the respective civic bodies from the Delhi government, and to discuss desilting issues.
(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)