The incident has taken place close to the Kabul Bank branch in Lashkargah city, the provincial capital of Helmand.
The provincial governor’s spokesman confirmed the incident and said preliminary reports indicate at least 38 people were killed in the attack.
He said more than 60 people were also wounded and there are fears that the casualties toll will climb as hundreds of people had gathered near the bank compound to collect their salaries.
According to Zwak, there are fears that the death toll may further rise as several people are in critical condition as they are being treated for the wounds they sustained in the attack.
The provincial public health officials had earlier said at least 29 people have been killed and nearly 50 others were wounded in the attack.
No group including the Taliban insurgents has so far claimed responsibility behind the attack.