The interest rates on FDs offered by leading public sector banks SBI, Union Bank of India, etc. are not as competitive as rates offered by small finance banks and private banks. There is a bonanza for risk-averse investors who prefer to invest in fixed deposits. Small finance banks, smaller and new private banks have lined up interest rates up to 8.6 percent on three-year FDs. Comparatively, leading public sector banks such as the State Bank of India (SBI), Union Bank of India, etc. have lagged behind. The average interest rate of the top 10 banks is 7.6 percent for FDs with a tenure of three years, according to data compiled by BankBazaar. Fixed deposits offer liquidity and assured interest income at regular intervals. Thanks to the ample liquidity they promise, FDs can be useful while building an emergency corpus. Here are the top 10 banks offering the best interest rates on FDs for a tenure of three years. Suryoday Small Finance Bank offers 8.6 percent interest on three-year FDs. Among small finance banks, it offers the best interest rates. A sum of Rs 1 lakh invested grows to Rs 1.29 lakh in three years. AU Small Finance Bank and Equitas Small Finance Bank offers 8 percent interest on three-year FDs. A sum of Rs 1 lakh invested grows to Rs 1.27 lakh in three years. Among foreign banks, Deutsche Bank offers the best interest rates. Deutsche Bank offers 7.75 percent interest on FDs of three-year tenure. A sum of Rs 1 lakh invested in FDs of these banks grows to Rs 1.26 lakh in three years. DCB Bank offers 7.60 percent interest on FDs with three-year tenures. Among the private banks, it offers the highest interest rate. An investment of Rs 1 lakh will grow to Rs 1.25 lakh in three years. Bandhan Bank, IDFC First Bank, IndusInd Bank and Yes Bank offer 7.25 percent interest on FDs with three-year tenures. An investment of Rs 1 lakh will grow to Rs 1.24 lakh in three years. Ujjivan Small Finance Bank offers 7.20 percent interest on three-year FDs. A sum of Rs 1 lakh invested grows to Rs 1.24 lakh in three years. Smaller private banks and Small Finance Banks are offering higher interest rates to garner newer deposits. The Deposit Insurance and Credit Guarantee Corporation, a subsidiary of the central bank, guarantees investments in fixed deposits of up to Rs 5 lakh. The data on FDs is as of September 13, 2023, for three-year term deposits (non-senior citizens and deposits below Rs 1 crore), as given on bank websites. All listed (BSE) public and private banks and foreign banks are considered for data compilation. Banks for which verifiable data is not available have not been considered. For all FDs, quarterly compounding of interest is assumed. Credit: HIRAL THANAWALA is a personal finance journalist with 9 years of reporting experience. Based in Mumbai, he covers financial planning, banking and fintech segments from personal finance team for Moneycontrol.