Catastrophic hyper-concentrated flow during the glacial lake outburst flood (GLOFs) and its far-reaching consequences on life, property and infrastructure are the foremost concern throughout the high mountain areas. The present investigation focuses on a potentially dangerous morainedammed proglacial lake in the Bhilangna Valley, central Himalaya, India, which has been expanding at an alarming rate during the last two decades. This lake has expanded from ${\sim}$0.15 to ${\sim}$0.35 km$^2$ during 1999–2020 at the cost of loss in the associated glacier area by ${\sim}$0.21 km$^2$ during the same time period. We have tried to understand the possible trigger and simulated the worst-case outburst scenario and its impact on the settlements and infrastructure in the downstream valley. Two breaching scenarios: (1) overtopping and (2) piping which may be caused by the ice calving into the lake or through avalanches, have been generated, and a maximum possible discharge amount of ${\sim}$4377 cumec has been estimated considering the lake depth as 30 m. The discharge can inundate an area of ${\sim}$19 km$^2$ along the river channel with a mean water depth of ${\sim}$38 m and an average velocity of ${\sim}$16 m/s. The MODIS-based land surface temperature analysis from 2002 to 2020 suggests that ${\sim}$19% of the total area of the Bhilangna Basin has biennial surface temperature ${\le}$0°C, indicating possible permafrost zone. Both the temperature analysis and the surface features surrounding the lake suggest the region to be dominated by permafrost.