A policeman and a suspected terrorist were killed and 13 others were injured on Thursday after bombs went off triggering a gunfight between police and militants near Bangladesh's biggest Eid gathering in the north of the country.

Bombs exploded near an Eid prayer gathering in Sholakia in Kishoreganj district where at least 200,000 people had gathered, police said.

One suspected attacker was also reported to be killed in an exchange of fire with police at the blast site as roads along in the area were cordoned off.

Abu Sayem, additional superintendent of Kishoreganj police, said two including a police constable and a terrorist died at scene. "One suspect has been held and about 13 injured," he said.

Local reports said six to seven people led the attack with sharp weapons on policemen when they were frisking people entering the Eidgah ground.

Kishoreganj ASP Obaidul Hasan said the blasts spread panic among thousands who were beginning to gather near the ground, but the prayers were not disrupted, bdnews24.com reported.

"That was probably a crude bomb. The facts are still unclear," he said.

The Islamic State (IS) terror group yesterday issued a new chilling video warning the Bangladesh government of more attacks in the country and across the world until Shariah law is established globally, saying last week's gruesome attack here was just "a glimpse".

The attack comes less than a week after​ the gunmen stormed the Holey Artisan restaurant in Dhaka, killing 22 people.

The victims, mostly foreigners, included Japanese, Indians and Americans as well as the Italians .