Kathmandu: Striking terror ahead of their two-day strike from December 29, Maoists have set off bomb blasts, attacked a school hostel, burned an old palace and destroyed a statue of a former king, even as the government announced an income- generating scheme for rehabilitating the rebels.

The Maoists have planted a number of bombs in and around the capital before their 'general strike' in Bagmati and Narayani, police sources said.

In the latest attack, they exploded a bomb on December 28 in front of Nepal State Bank of India (SBI) bank's branch office at New Road, at the heart of Kathmandu city, they said, adding there were no casualties.

Two Maoist activists came on a motorbike early on December 28 morning and hurled the explosive packed in an effigy to a taxi stand, they said. When police threw it in the garbage can thinking that it was an effigy, it suddenly exploded, they said.

The effigy had 'Gyanendra' (king) and 'Paras' (crown prince) written on it, police said.

A powerful bomb exploded on December 27 at a school hostel in front of the Education Minister's house injuring seven people including five children aged between 3 and 9 and two teachers of East Pool English Boarding School of Jorpati on the outskirts of Kathmandu, the sources said.

The school hostel was damaged by the blast. The bomb, planted near the main gate of the residence of Education Minister Devi Prasad Ojha, also broke its windowpanes.

However, the Minister was not at home at that time and his wife and children escaped unhurt, they said.

Maoists blasted a bomb and set on fire an old 'shera palace' previously belonging to Helen Shah, a member of the royal family, in Bidur municipality of Nuwakot district on December 27, police said.

The building was completely destroyed by the attack and caused losses of nearly 40 million Nepalese Rupees, a media report said.

A group of ultras destroyed the statue of late King Mahendra, father of King Gyanendra, situated in the premises of Ramcharitra Secondary School in Bara district on December 27.

Meanwhile, Nepal government on December 27 announced a scheme for rehabilitation and income generation programmes for those Maoists who were either captured by security forces or have surrendered.

The scheme prepared by the National Security Council (NSC) headed by Prime Minister Lokendra Bahadur Chand has proposed to start a rehabilitation centre as a pilot project in the Maoist stronghold Nepalgunj, in mid-West Nepal, to be followed by similar centres in others parts of the country.

The concept paper of the scheme aims at disarming the Maoists and rehabilitating people who are forcefully recruited by the rebels.

The government, under the scheme will provide security, land and means of livelihood needed for the rehabilitation of such people.

PTI