Gen. Bakhshi belongs to the Lau clan of the Muhiyal community, noted for its martial tradition. His father, Sardar Bahadur Bakshi Lal Chand Lau OBI was a decorated soldier as well, in the British Indian Army.
His family belonged to the village of Guliana, Distt. Rawalpindi. As with many other non-Muslims of that region, his family had to shift to India after the ethnic cleansing accompanying the Partition of India. Prior to the partition, he graduated from Rawalpindi's Gordon College in 1942.
After being commissioned into the Baluch Regiment of the British Indian Army in 1942, his first major battle was against the Japanese in Burma in World War II, where he earned a Mention-in-Despatches for overcoming a heavily fortified Japanese position. After the Liberation of Burma, he participated in the operations to liberate Malaysia from Japanese control, earning a fast-track promotion to the rank of a Major for his role.
In the Indo-Pak war of 1948 , he was awarded a Vir Chakra for his bravery. Soon afterwards, he was awarded the MacGregor Medal in 1949. In the Indo Pak war of 1965, he was instrumental in the capture of the Haji Pir Pass from the Pakistani Forces, for which he was awarded the Maha Vir Chakra. In the early 60s, he led his battallion in a United Nations Operation to undo the secession of the province of Katanga from Congo, in the process earning a Vishisht Seva Medal. In 1969-1970, he led very successful counter-insurgency operations in pockets of North East India. In the 1971 war, he was instrumental in the capture of territory in what is now referred to as the crucial Chicken-Neck Sector, for which we was awarded the Param Vishisht Seva Medal.
He is popularly known as "Zoru" in the Indian Army.