Nigerian companies are parking more of their funds in bank deposits, upending a push by the central bank to fuel lending to support the economy.

“Many rich corporates have simply been content with saving their cash balances and collecting huge interest payments,” central bank said in a statement on Wednesday. That’s at the expense of “expanding their investment, which should lead to hiring more people and producing more goods.”

Contrary to Plan

It also means that banks aren’t meeting a central bank requirement to use at least 65% of their deposits for loans, or face penalties. The ratio dropped to 63.9% in August from 68% in January, as savings expanded quicker than deposits, the central bank said.

The latest data will come as a blow to a central bank that has resorted to unconventional policies, such as banning imports of some goods to spur local manufacturing and reduce Nigeria’s reliance on the oil industry. It’s also taken a development role by offering cheap loans through commercial lenders to boost sectors like agriculture.

Fitch Ratings criticized central bank last month for its interventionist policies and for implementing sometimes conflicting rules. The ratings company cited a regulation that forces banks to hold at least 27.5% of their cash in non-interest bearing accounts with the regulator, which sucks cash out of the system that could otherwise be used for lending.

Mathematically impossible rules stump Nigeria banks on loans

Nigerian banking 10 index, which measures the nation’s biggest lenders dropped 1.5% to 285.25 at close in Lagos. The gauge is down 20% this year compared to the 5.3% drop by the 153-member Nigerian Stock Exchange Main-Board Index.

Bloomberg