Punjab Home Minister Raja Basharat said that a grenade was thrown at the procession when it passed by Jamia Masjid in the Muhajir Colony at around 10 AM. He further told media that one of the attackers was arrested by the police.
All injured were shifted to the Bahawalpur Victoria Hospital where two of them were said to be critical.
Following the incident, Rangers were deployed in the area.
As per officials, the procession later resumed and mourners continued the Ashura rituals.
Punjab Chief Minister Sardar Usman Buzdar has directed the Counter Terrorism Department (CTD) to submit an inquiry report on the Bahawalnagar blast after completion of the investigation.
Violence against the Shia Muslim community, that makes up nearly 20 per cent of Pakistan's population, has been taking place for decades. Ashura processions have been targeted in large scale attacks that have claimed thousands of lives. Banned sectarian outfits routinely engage in hate speech against the Shia community during their rallies and protests.