Dhaka, Nov. 26 -- Borrowers should brace for costlier funds as lending-rate caps are being phased out to give a much-coveted profitability raise to bankers who lament inflationary pressure on their earnings, sources say.

Bangladesh Bank (BB) plans to lift the limits on interest on credits in phases from the third quarter (Q3) of this fiscal year, but 'unofficial' hints already begin giving the banks a free play.

In accordance with the plan, officials say, the central bank is set to lift the interest- rate cap on SMEs first, to be followed by working capital and industrial term loan in tandem.

This reverting to open money market allows banks to raise the rate on interest to "balance out the crushing pressure of inflation".

As part of t...