Police blamed the Tuesday attack on Maoist rebels fighting for a communist state.
Passengers were waiting to board the bus when the bomb went off in the Kalanki neighbourhood of Katmandu at about 06:15 (0030 GMT).

The area is next to a vegetable and meat market which is usually crowded.
The injured were taken to a hospital for treatment and soldiers cordoned off the area; at least three buses were damaged in the explosion.
The area is usually heavily guarded because it is the main route in and out of Katmandu and most of the buses and trucks stop there to drop off cargo and passengers. 

Despite police patrols, the
Nepalese capital is vulnerable 

Rebels say they are inspired by Chinese revolutionary leader Mao Zedong and have been fighting since February 1996 to replace Nepal's monarchy with a communist state.

The eight-year insurgency has claimed more than 8500 lives, though no one is believed to have died in this latest attack.
Since the rebels marked the eighth anniversary of their insurgency last month, they have increased attacks in the capital.

Last week they exploded at least half a dozen bombs in Katmandu.
Fighting between the rebels and government troops resumed after insurgents withdrew from a cease-fire in August.

The rebels walked out of peace talks and resumed attacks on government and civilian targets.