Police said a former separatist fighter-turned-pro-Indian politician, Usman Majeed, was the target of Wednesday's attack.

He was wounded in the blast and is undergoing an operation in a city hospital for a head injury.

Casualties

Police and hospital officials said the toll could rise as many people had been injured "very critically".

"They are not in a position even to give their names out," said Dr Muzaffar at Srinagar's main Sri Maharaja Hari Singh Hospital.

He added that as many as 25 injured persons were brought to that hospital within minutes of the rush-hour blast outside Jammu and Kashmir Bank's corporate office at an intersection connecting the tourist-frequented Dal Lake area with uptown Srinagar.

The area is considered secure, with scores of police officers and paramilitary troopers patrolling the streets around the clock.

Target

Deputy Chief Minister Muzaffar Hussein Baig's official residence is yards from the scene of the blast.

No  group has claimed
responsibility for the blast

He was away in Jammu, the winter capital of the state, said the officials.

Majeed, the reformed renegade, was a junior minister in the coalition government led by the regional People's Democratic Party in Indian Kashmir. He was dropped in the reorganisation of the ministry this month. 

"It was an attack on me," he said from his hospital bed. 

Majeed is co-founder of the Awami League, a political group of former separatist fighters who after switching loyalty began helping Indian troops in their campaign against separatists.

His close associates Muhammad Yusuf Parray and Javed Shah were killed in similar actions earlier.

Responsibility

No organisation has so far admitted responsibility for the blast.

Officials, however, believe that this and other terror strikes in the recent past that killed at least eight people, including two police officers, could be in retaliation for the arrest of three Kashmiris in connection with the 29 October blasts in the Indian capital.

Peerzada Muhammad Sayeed, chief of Congress party and a minister in Indian Kashmir said, "It reflects shared frustration on the part of the terrorists who want to sabotage the peace process between India and Pakistan which has seen some headway in the recent past".