Increasing loan and credit card debt racked up by young Indians splurging on aspirational purchases from clothing to holidays has raised concerns about rising delinquencies and a wider lending slowdown.

About a third of millennials and 40 per cent of Gen Z Indians are submerged under unsustainable borrowings, estimates Freed, an Indian debt resolution platform. The average Freed client has six loans equalling Rs560,000 ($6,694), up from four loans worth Rs520,000 in April.

“You have this aspirational spending meeting easy borrowing,” Ritesh Srivastava, founder and chief executive of Freed, told the Financial Times. “What makes it worse in India is that there’s a lending boom, there’s a lack of financial literacy and household savings are at an all-time low?.?.?.?that’s a heady cocktail.”