Lori Ann Walsh Imdad was in her apartment when she heard the gunshots sometime close to 9pm. It seemed like they they never stopped.

And when she looked out of her her window she saw people running for their lives.

On Friday evening, Ms Imad, the principal of the American Standard School in the Bangladeshi capital, Dhaka, found herself witness to the latest incident of terror - apparently undertaken by Islamic extremists - to stun the world. The school, which is currently closed the Ramadan holiday, is located just a street or so from the restaurant where a group of gunmen set off explosives and reportedly took hostage up to 20 people.

“I’ve been hearing gunshots all night long,” she told The Independent. “And I’ve seen people running.”

Ms Imad She said the shooting had since eased off and that the firing was now only “sporadic”.

The gunmen stormed into the Holey Artisan Bakery located in Gulshan 2, an upmarket neighourhood that is home to many shops, embassies and restaurants. She said it functioned as a bakery during the day and then transformed itself into a restaurant, popular with foreigners, in the evening.

She said she knew the owner, who is Italian.

“It is a nice place to go and sit quietly. It has excellent cheesecake,” she said.

Reuters said that Sumon Reza, a kitchen worker who escaped the attack, told reporters that the attackers were armed with firearms and bombs as they entered the restaurant and took customers and staffers hostage at gunpoint. Jamuna Television, quoting Mr Reza, said the attackers chanted “Allahu Akbar” (God is Great) as they launched the attack.

Bangladesh, which was created in 1971 when it broke from Pakistan in a bloody, brutal war of independence, is no stranger to violence, much of it the result of Islamic extremism.

Lori Ann Walsh Imdad said she heard gun shot and and saw people running (Facebook)

The world’s third largest Muslim country has seen a spate of attacks on bloggers, intellectuals and members of religious minorities. Experts have warned about the rising influence of Isis, which have claimed responsibility for many of the incidents, despite the government’s insistence that Isis is not active in the country. Other militants have announced their allegiance to Al-Qaeda in the Indian Subcontinent. (AQIS)

“To our knowledge, as such today Isis hsas not been involved in the recruitment of militants, or any militant activities within the boundaries of Bangladesh,” Hasanul Haq Inu, the country’s information minister, told the BBC earlier this year.

(AP (AP)

Instead, the country prefers to blame home-grown jihadi groups such as the Jamiatul Mujahideen Bangladesh or JMB for the attacks.

The JMB achieved notoriety through public lynching of left-wing militants and assassinations of judges, and in 2005 it set off more than 500 bombs in 64 districts simultaneously.

The government is headed by the Awami League and its leader Sheikh Hasina, the daughter of Sheikh Mujibur Rahman, first president of Bangladesh, who was killed in 1975.