Banana (Musa paradisiaca) farming generates huge quantities of biomass, all of which goes to waste due to the non-availability of suitable technology for its commercial application. The potential solution to this issue could be the conversion of pseudo-stems into valuable assets by converting them into fibres for various textile and non-textile applications. The specific characteristics of banana pseudo-stem fibre i.e. high absorptivity, breathability and biodegradability made it sustainable as well as suitable for the development of diversified products and blending with other natural fibres. However, non-uniformity in availability, obscurity of its intended uses and lack of knowledge for assessment of fibre quality posed a biggest hurdle to reach the fibre into the textile markets. Hence, a novel sensor-based digital instrument for assessing the quality parameters i.e. bundle strength and fineness along with overall grade of banana pseudo-stem fibre is presented in this research article. The developed instrument mainly consists of a fibre bundle strength measurement unit, fineness measuring unit and visual interface cum data acquisition unit. Test results indicated that bundle strength and fineness measured by developed instrument varied from 20.92 g/tex to 28.31 g/tex and 5.63 tex to 6.41 tex respectively. Furthermore, a good correlation between the measured and actual outputs of bundle strength (One-Way ANOVA, F28,2= 3.914, P =0.224), fineness (One-Way ANOVA, F51,2= 4.730, P =0.190) and overall quality of fibre (Independent sample T-Test, F34,1= 0.95, P =0.190). was observed at 5 % level of significance. The present study also introduced a grading system for quality assessment of banana fibre based on the well-established and well-recognized grading system of jute fibre developed by Indian Standard (IS: 271 2020). The developed instrument is easy to build as well as easy to use and have an approximate cost of $1800.00. The combination of developed instrument and grading system is an accurate, feasible and time-ordered technique for the assessment of the overall quality of the banana fibre and well suited for the actual conditions.