There is a goldmine for risk-averse investors who prefer to invest in fixed-term deposits. Small finance banks as well as smaller and new private banks have quoted interest rates as high as 8.6 per cent on three-year FDs. In comparison, leading public sector banks like State Bank of India (SBI), Union Bank of India, etc. are lagging behind. The average interest rate of the top 10 banks, according to FDs, is 7.6 percent with a tenure of three years BankBazaar.

Fixed-term deposits offer liquidity and secured interest income at regular intervals. Thanks to the ample liquidity they promise, FDs can be useful in building an emergency corpus. Here are the top 10 banks offering the best interest rates on three-year FDs.

Suryoday Small Finance Bank offers 8.6 percent interest on three-year FDs. It offers the best interest rates among small finance banks. An invested sum of Rs 1 lakh grows to Rs 1.29 lakh in three years.

AU Small Finance Bank and Equitas Small Finance Bank offer 8 percent interest on three-year FDs. An invested sum of Rs 1 lakh grows to Rs 1.27 lakh in three years.

Deutsche Bank offers the best interest rates among foreign banks. Deutsche Bank offers 7.75 percent interest on FDs with a term of three years. 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 a tenure of three years. It offers the highest interest rate among private banks. 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 three-year FDs. 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. An invested sum of Rs 1 lakh grows to Rs 1.24 lakh in three years.

Smaller private banks and small finance banks offer higher interest rates to attract new 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 and is for three-year term deposits (non-senior and deposits below Rs 1 crore), as indicated on the banks’ websites. All listed (BSE) public and private banks as well as foreign banks are taken into account for data collection. Banks for which no verifiable data is available were not included. Quarterly compounding is assumed for all FDs.