He said the money would be used to persuade individual Taliban fighters that they are better off on the government's side rather than fighting on the side of the Taliban.
Parts of the funds would be spent on projects to develop the fighters' villages and building roads to their communities, he said.
Poverty and tribal concerns
Quoting the Afghan finance minister, Bays said: "Many people are not actually fighting for the Taliban but alongside the Taliban because of poverty and other local concerns, because of tribal issues."
"They [those supporting reconciliation] are hoping they may be able to peel these people away from the Taliban while, at the same time, conducting talks on a much higher level with the leaderships of the Taliban and the Hezb-e-Islami."
Hamid Karzai, the Afghan president, hopes to win Western support for reconciliation and reintegration of fighters at the London conference.
He has said there are "thousands and thousands and thousands" of moderate Taliban who needs to be reintegrated in the Afghan society.
Al Jazeera's David Chater, reporting from Kabul, said talks had also been held with the group Hezb-e-Islami, in the Maldives islands, on January 23-24.
"Gulbuddin Hekmatyar [the group's leader] sent his son and two son-in-laws to the meeting," he said.
"They [government representatives and Hezb-e-Islami] decided to go set up two delegations ... One will be headed by Hekmatyar's son and the other one will be headed by the deputy head of the peace and reconciliation commission.
"He will go and see President Karzai and Hekmatyar's son will go and see the Taliban."
Chater said a Taliban leader had been due to attend the meeting but dropped out in the last minute citing health reasons.
'No international support'
In an interview to Al Jazeera, Omar Zakhilwal, Afghanistan's finance minister, confirmed that talks had been held.
"There has been engagement", he told Al Jazeera.
"Instead of initiating talks, the government and foreign forces started to strike Taliban fighters ... and take them to detention centres like Guantanamo and others"
Habibullah Fawzi, former Taliban ambassador
"But because of the lack of international support for the president's initiatives, we couldn't take the next steps of promising them what they needed to hear from us: assurances, first and foremost, with the respect to their security, and second, that they will be treated just like any other Afghan or a politician."
Separately, Habibullah Fawzi, the former Taliban ambassador to Saudi Arabia, said Karzai wants to negotiate with the Taliban, but has failed to do so because the Afghan government’s views differ from those of the US and foreign forces.
"The Afghan government could have started a dialogue with Taliban if it had had a unified stance with the international community," he told Al Jazeera.
"However, they lost that opportunity, and instead of initiating talks, the government and foreign forces started to strike Taliban fighters in several areas and on the borders and take them to detention centres like Guantanamo and others.
"This has forced Taliban to wage war."
In a move leading up to the London conference, the UN Security Council panel has removed five senior Taliban officials from its sanctions list.
A statement on Tuesday said the panel had "approved the deletion of the five entries" from its blacklist of individuals subjected to a travel ban, assets freeze and arms embargo.
Karzai had been pushing for Taliban names to be removed from the list and was planning to raise the issue at a conference on Afghanistan in London on Thursday.
A Western diplomat said those removed from the list were now believed to be "moderate Taliban officials" with whom Karzai could start a dialogue.
The five were all members of the ousted Taliban government.
Wakil Ahmed Muttawakil, the former Taliban foreign minister now taken off the list, called on the UN and the US to remove all the names on their blacklists.
"[Not only] the UN list, but the US blacklist should also be reconsidered, as the names are not specified and the number is unknown. We can say that the number of those wanted by the US is between 100 and 1000," Muttawakil said.
The other four former Taliban ministers removed from the UN list are Faiz Mohammad Faizan, Shams-US-Safa, Mohammad Musa, and Abdul Hakim.
The UN blacklist was established under UN Security Council Resolution in 1999 for the purpose of overseeing implementation of sanctions imposed on Taliban-controlled Afghanistan for its support of Osama bin Laden's al-Qaeda network.
Under the resolution, UN member states are required to impose sanctions on any individual or entity associated with al-Qaeda, bin Laden and/or the Taliban.
The list contains about 500 names, including 142 linked to the Taliban.