According to Lahore police chief Chaudhry Shafiiq, a device was planted outside an electronics shop in the Pakistan Chowk that went off in early hours of Friday, injuring over a dozen people.
Shops were closed while scores of people were present at the roadside eateries that remained open till late hours.
Window panes of houses and vehicles parked near the blast site were also damaged.
The injured were shifted to Services Hospital where the condition of two is stated to be critical.
"I had received threats from unknown persons who demanded Rs 2million from me as extortion," he said, adding he had reported the matter to local police.
The bomb disposal squad said at least 250 grams of explosives was used in the device.
The police chief has constituted a team headed by a divisional superintendent police to investigate the matter.
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