"Yasin Bhatkal was traced along the Bihar-Nepal border last night by our intelligence agencies. He is under the custody of Bihar police and the interrogation has been going on. Till now, this is the only information I can give you," Union Home Minister Sushilkumar Shinde told reporters outside Parliament House.
30-year-old Yasin had been on the run since 2008. The IM leader is wanted in a string of terror attacks in Ahmedabad, Surat, Bangalore, Pune, Delhi and Hyderabad.
It is the second major breakthrough for Indian agencies after the arrest of Lashkar-e-Taiba bomb expert Abdul Karim Tunda on August 16.
Yasin, who co-founded IM in 2008 along with brother Riaz, is also wanted in the German Bakery bomb blast in Pune on February 13, 2010, that left 17 dead.
The IM was designated a terrorist group by the government under the Unlawful Activities Prevention Act in June, 2010.
The banned outfit was declared by the US as a Foreign Terrorist Organisation in 2011.
Yasin, also known as Mohammed Ahmed Siddhibappa, along with three aides Tahaseen Akhtar Wasim Aktar Shaikh (23), Asadulla Akhtar Javed Akhtar (26) and Waqas alias Ahmed (26), was allegedly behind three coordinated bomb explosions at Opera House, Zaveri Bazaar and Dadar West in Mumbai on July 13, 2011, that left 27 dead and 130 injured.
In February this year, the Maharashtra Anti-Terrorism Squad (ATS) had announced a reward of Rs 10 lakh each to anyone giving information on Yasin and the three aides.
Except Tahaseen, who allegedly planted a bomb in the Dadar blast, the rest three were also involved in the four co-ordinated low-intensity explosions, which struck the busy arterial road in the heart of Pune city on August 1, 2012.
Eight accused had been arrested in this connection.
In December 2011, the Delhi police had also announced a reward of Rs 15 lakh for any information leading to the arrest of Yasin in several terror cases, including three in Delhi.
While Yasin hails from Bhatkal in Karnataka, Tahaseen is from Samastipur in Bihar while Asadullah is from Azamgarh in Uttar Pradesh.