Six people hospitalised after Melbourne man "sets himself alight" inside bank

An explosion was heard by one witness, as well as children screaming

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Two people are reported to be "fighting for their life" after a man set himself on fire in a bank in Melbourne.

Police say the suspect walked into a Commonwealth Bank branch in the suburb of Springvale and used a flammable liquid to start the fire at around 11:30am.

Six of the worst injured are being treated in hospital, including the accused. In total, 26 people were injured, including children.

One remains in a critical condition, one is critical but stable, one is serious but stable and three others are listed as stable.

Black smoke and flames quickly took hold, trapping customers and staff inside before brave passers-by helped them out of the bank through a rear fire exit, SBS reports.

Some reports said he doused himself with the accelerant and went up in flames, although this was not confirmed.

“He had some sort of accelerant with him. A container, not sure what he had. And somehow that accelerant was lit inside the bank,” Inspector Jacqui Poida said.

The motive was not clear and Poida said it was too early to tell if it was terror related.

CFA operations officer Paul Carrigg said there was "evidence of an explosion" and it was "amazing" no one had lost their life.

Nearby businesses including the National Australia Bank and a Caltex petrol station closed for the day shortly after the blast.

The explosion occurred one day after Islamic State released a propaganda video encouraging terror attacks in Melbourne.