The purpose of the study is to standardize the silver nanoparticle (BP-AgNPs) synthesis and its antibacterial activity and photocatalytic application with the selected dyes using the banana pseudo stem extract. “One-factor analysis (OFTA)” was carried out for the standardization of silver nanoparticle synthesis and nanoparticle-chitosan complex immobilization. The parameters were identified with plant quantity (20 g), silver nitrate concentration (1 mM), the ratio of plant extract and silver nitrate solution (2:8), pH (12), temperature (37 °C), dispersed light conditions, shaking conditions (120 rpm), and time (6 h) were analysed. The photocatalytic decolorization efficiency of the standardized BP-AgNPs (immobilized with chitosan complex) has shown 96.92% for methylene blue (10 ppm) at 3 h and 97.55% for safranin (100 ppm) at 15 h. The antibacterial activity for the synthesised BP-AgNPs was determined. MIC value of the BP-AgNPs was determined to be 15.62 μg. mL−1 for S. aureus. The synthesised BP-AgNPs treated with 0.5×, 1× and 2× MIC concentration (x = 15.62 μg. mL−1) showed decreased viable counts of S. aureus (99.6% at 2× concentration having viable count of 22.6 × 102 CFU. mL−1) at 24 h incubation when compared with the control culture. The structural characteristics of the BP-AgNPs were identified as spherical with SEM and the size was identified as 12.19 ± 1.62 nm with TEM and as 37.23 ± 17.89 nm with XRD. The parameters such as FTIR, Zeta potential, EDS further supports the nanoparticle synthesis with banana pseudostem extract. The current result suggested that, the silver nanoparticles (BP-AgNPs) synthesised using the extract of the banana pseudo stem could be used as an alternative source for dye decolorization and antibacterial activities.