Authorities in Pakistan have arrested Hafiz Saeed, the alleged mastermind of a four-day militant attack on the Indian city of Mumbai in 2008, on terror finance charges, a spokesman for the chief minister of Punjab province said.

The arrest came days before a visit to Washington by the country’s prime minister, Imran Khan, who has vowed to crack down on militant groups operating in Pakistan.

Saeed, designated a terrorist by the US and the United Nations, is the founder of Lashkar-e-Taiba (LeT), or “Army of the Pure”, the militant group blamed by the US and India for the Mumbai attacks, which killed more than 160 people.

He has denied any involvement and said his network, which includes 300 seminaries and schools, hospitals, a publishing house and ambulance services, has no ties to militant groups.

A spokesman for the Punjab governor, Shahbaz Gill, said Saeed was arrested near the town of Gujranwala in central Pakistan.

“The main charge is that he is gathering funds for banned outfits, which is illegal,” the spokesman said.

The Punjab counter-terrorism department said in a statement that Saeed had been arrested while going to a court in Gujranwala to seek pre-arrest bail but was remanded in custody.

Pakistan, which is included on a so-called grey list compiled by the Financial Action Task Force, a money laundering and terror finance watchdog, has been under increasing pressure to stop the financing of militant groups.

However, an Indian government official said that arresting Saeed was not enough and that he should be put on trial and convicted.

“We want real action, not these kinds of steps that are reversible. One court orders his arrest, another frees him,” said the official, who has close knowledge of diplomatic issues with Pakistan.

He said the sense in New Delhi was that Pakistan was taking steps such as these before Khan’s trip to the US, which has offered a $10m (£8m) reward for information leading to Saeed’s conviction over the Mumbai attacks.

“We have seen this before,” the official said. “After the visit is over, things are usually back to what they were before.“

In 2017, Saeed was put under house arrest by Pakistani authorities and subsequently released after being cleared of charges against him, drawing strong criticism from Washington and New Delhi.

Lashkar-e-Taiba, designated as a foreign terrorist organisation by the US state department, aims to drive India out of the disputed region of Kashmir and establish an Islamic state across Kashmir, Pakistan, and India.