Pakistani authorities have reportedly imposed restrictions on the movement of Jaish-e-Mohammed founder Maulana Masood Azhar and confined him to his home despite turning down India's demand for handing him over.

Azhar, who was freed by Indian authorities along with two other terrorists in exchange for passengers of an Indian Airlines flight hijacked from Kathmandu to Kandahar in 1999, has been confined to his multi-storey building in Model Town area of Bahawalpur, The News daily reported on Tuesday.

The report quoted official sources as saying that Azhar's activities had been restricted in the wake of India's demand to hand him over along with criminals Dawood Ibrahim [Images] and Tiger Memon.

There was no official word on whether Azhar had been restricted to his home. The Pakistan Army [Images] on Monday confirmed it had launched an operation against banned militant groups.

Lashker-e-Taiba commander Zakiur Rehman Lakhwi is among over 20 militants arrested during the crackdown, sources said.

The Pakistan government on Monday turned down India's demand to hand over Azhar, Dawood Ibrahim and Tiger Memon. The demand had been made in a demarche handed over by India in the wake of the Mumbai terror attacks [Images].

Azhar's movements have been restricted in the past too when India had demanded his handing over. There have been reports in recent months that Azhar and the Jaish had stepped up activities, including the raising of funds and organising large rallies, in the Bahawalpur area.

The militant leader was being held in an Indian jail when he was released by the Indian government in exchange for passengers of the airplane hijacked by several Pakistani terrorists and taken to Kandahar.
                                                                                           
Soon after his release, Azhar formed the Jaish.

Azhar and his group had faced restrictions in the wake of the 2001 attack on the Indian parliament and the 2003 suicide attacks on former President Pervez Musharraf [Images].

The Jaish was renamed as Khudam-ul-Islam and reorganized under the command of Mufti Abdul Rauf, the younger brother of Azhar.

The US State Department designated the Jaish a foreign terrorist organisation in December 2001, forcing the Musharraf regime to slap a ban on the group in January 2002.

Azhar was formally arrested by Pakistani authorities in December 2001, following the attack on Parliament, but a review board of the Lahore [Images] High Court ordered his release a year later.

Azhar reportedly fell out of favour with the Pakistani establishment in the wake of American allegations about his Al Qaida links and because of the belief that he had been providing logistical support to fugitive Al Qaida and Taliban [Images] leaders.

Following the January 2002 kidnapping and murder of American journalist Daniel Pearl by Sheikh Ahmed Saeed Omar, a close aide of Azhar, the US had sought the custody of the Jaish chief, saying authorities wanted to file charges against him for his involvement in the hijacking of the Indian Airlines flight, which had an American citizen on board.

However, Pakistani authorities had turned down the US demand, saying Azhar was not a hijacker and his incarceration in India had been 'illegal'.