The explosion is believed to have hit near Massoud square, where the US embassy is housed along with several other western diplomatic buildings.
Interior Ministry spokesman Najib Danish said the blast occured at the entrance to a Kabul Bank branch, not far from the embassy.
There are believed to be casualties following the blast which took place at roughly 10:15am local time (7:15am GMT), although police are yet to confirm.
Unconfirmed reports claimed the explosion was caused by a suicide bomber, who triggered the blast after being spotted by police in the area.
The public health ministry said one person had been killed and eight wounded.
More to follow…