A man set fire to the Commonwealth Bank branch at Springvale Central about 11.30am, police said.

People were carried from the bank on Springvale Road on stretchers, as paramedics and firefighters treated more than a dozen others on the footpath.

Paramedics have treated 27 people at the scene, including the man who allegedly set the fire.

He has been taken to The Alfred hospital in a serious condition, under police guard.

Five people, who were inside the bank at the time, suffered serious burns. They have been taken to The Alfred hospital, each in a serious condition.

Twenty-one other people, including three children, were treated for smoke inhalation.

Ten people were taken to the Monash Medical Centre, while 11 were taken to Dandenong Hospital for treatment.

Adam Coulshed, a local construction worker who was on site across the road from the bank, said there was a loud bang followed by plumes of black smoke. 

"I thought it was a car accident," he said.

He said his co-worker helped put out the fire with a shopkeeper at a neighbouring Optus store.

The man was trying to get money from an ATM at the time of the explosion, he said.

"It was just black and there were people with blood (coming out of the bank)."

Eric Fleuriot was at Springvale train station when several police cars sped past.

"It's bloody awful," he said of the fire. "I just can't believe it."

In a statement, the Commonwealth Bank said its "response team" was working with emergency services.

"We can confirm there was an incident at our Springvale branch today. Our first priority is the safety of our staff and customers and as a result the branch will remain closed for the rest of the day," the statement says.

"Our response team is on site and we are working closely with local authorities and emergency services."

Springvale Road has been closed in both directions between Balmoral Avenue and Windsor Avenue.