A gang of heavily armed men attacked three banks in the centre of Araçatuba in the early hours of Monday local time.
After the robbery, the gang took a number of hostages and surrounded the local military police station. Gang members also blocked key access roads into the city by setting cars alight, local media reported.
A 25-year old cyclist was seriously injured when one of the explosive devices planted by the gang went off as he cycled past.
The police said there were still at least 14 bombs across the city and that the first indication was that they had some sort of sensor, which is triggered either by heat or motion.
Schools will remain closed on Monday and residents have been urged to stay indoors until all the devices have been dismantled.