The five Jamaat-ul-Mujahideen Bangladesh (JMB) militants were accused of killing a public prosecutor in 2007 who had argued the government's case in trying five top JMB leaders including its chief Shaikh Abdur Rahman, who were eventually hanged for the murder of two judges.
Additional district and sessions judge in southwestern Jhalakathi district, Abdul Halim pronounced the verdict as three of the five JMB convicts appeared in the dock while two others were tried in absentia, TV reports said.
The blast set off alarm bells on both sides of the border with high-level exchange of visits by senior security officials and arrest of several JMB activists in India and Bangladesh.
India's National Intelligence Agency (NIA) and Bangladesh's anti-crime Rapid Action Battalion (RAB) exchanged lists of JMB operatives and Islamist militants.
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Security experts have expressed fears that the focus of law enforcement agencies in tackling the political unrest has created space for extremist elements like JMB to reorganise and regroup after years of anti-militancy operations had virtually destroyed their networks.
"Violent Islamist factions are already reviving, threatening the secular, democratic order. While jihadi forces see both parties as the main hurdle to the establishment of an Islamic order, the AL and the BNP perceive each other as the main adversary," the ICG report read.
The central Bangladesh Bank has also alerted commercial banks on precautionary measures against use of banking systems for terror financing both at home and aboard.