Miss Bond said she saw flames coming from his jacket.
"Someone called the police but anyone who approached him he was violent towards," she said.
Others at the scene spoke of a plainclothes policeman arriving, jumping out of his vehicle with a fire extinguisher in hand, and restraining the man.
Unable to use the fire extinguisher because of the man's aggressive state, the police officer forced him against the wall in an effort to smother the flames.
That officer - Detective Sergeant Brett Roberts - played down his role at the scene, and said it was Travis Scott, a member of the public, who was the real hero.
Mr Scott had gone to the Westpac Moray Pl branch to pick up his wife, Danielle, when bank staff noticed the man on fire.
Mr Scott suffered minor burns to his left hand as he worked to pat down the flames, when he was assisted by Det Sgt Roberts, who had not wanted the agitated man to breathe in any noxious effects of the fire extinguisher.
Senior Sergeant Kelvin Lloyd praised the actions of the passers-by, particularly Mr Scott, who put himself in danger in trying to help the man.
The man was treated for non-serious burns in Dunedin Hospital last night, and was being assessed by psychiatric services, he said.
No charges were likely.