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The bounty for Hafiz Mohammad Saeed, the founder of Lashkar-e-Taiba (LeT) who makes frequent public appearances in Pakistan, was announced by US Undersecretary of State Wendy Sherman in India on Monday and posted on the US government's Rewards for Justice website.
The only higher reward currently offered by the US government is the $25 million for Al-Qaeda leader Ayman al-Zawahiri.
Saeed is head of the banned charity Jamaat-ud-Dawa, seen as a front for LeT, and on March 27 he addressed thousands of people at a rally in Islamabad urging Pakistan not to reopen its Afghan border to NATO and US supply convoys.
The Rewards for Justice notice said Saeed was "suspected of masterminding numerous terrorist attacks, including the 2008 Mumbai attacks, which resulted in the deaths of 166 people, including six American citizens".
Under the scheme overseen by the State Department, the United States pays out bounties for information leading to the arrest and conviction of a named suspect.
The government in New Delhi welcomed the announcement, saying it reflected the commitment of India and the United States to bring the perpetrators of the Mumbai attacks to justice.
"It also sends a strong signal to Let, as also its members and patrons, that the international community remains united in combating terrorism," the Indian foreign ministry said in a statement.
The US and India "agree that all terrorist organisations, including LeT, should be defeated and have called for elimination of terrorist safe havens and infrastructure inside Pakistan and Afghanistan", the statement added.
Pakistan put Saeed under house arrest a month after the Mumbai attacks. But he was freed in 2009, and in 2010 the Supreme Court upheld his release on the grounds that there was insufficient evidence to detain him.
Washington also posted a $2 million reward for Hafiz Abdul Rahman Makki, described as LeT's second-in-command.
Dawa, which is one of Pakistan's biggest charities and known across the country for its relief work after a 2005 earthquake in Kashmir, has long denied all terror accusations.
However, both LeT and Dawa are blacklisted by the US government as foreign terrorist organisations.
News of the bounty comes as Washington and Islamabad seek to repair their fractious relationship, which has been hit by a series of crises over the past year.
US lawmakers voiced fury at the discovery of Al-Qaeda founder Osama bin Laden living in Pakistan. He was killed in a US special forces raid last May, a decade on from the September 11, 2001 attacks.
Pakistan in turn questioned the relationship and closed its Afghan border to NATO supplies in November after an air strike killed 24 Pakistani soldiers. The White House voiced regret for the deaths but stopped short of apologising.