The present study demonstrates an economical and environmental affable approach for the synthesis of "protein-capped" silver nanoparticles in aqueous solvent system. A variety of standard techniques viz. UV-visible spectroscopy, transmission electron microscopy (TEM), energy dispersive spectroscopy (EDS) and X-ray diffraction (XRD) measurements were employed to characterize the shape, size and composition of nanoparticles. The synthesized nanoparticles were found to be homogenous, spherical, mono-dispersed and covered with multi-layered protein shell. In order to prepare bare silver nanoparticles, the protein shell was removed from biogenic nanoparticles as confirmed by UV-visible spectroscopy, FTIR and photoluminescence analysis. Subsequently, the antibacterial efficacy of protein-capped and bare silver nanoparticles was compared by bacterial growth rate and minimum inhibitory concentration assay. The results revealed that bare nanoparticles were more effective as compared to the protein-capped silver nanoparticles with varying antibacterial potential against the tested Gram positive and negative bacterial species. Mechanistic studies based on ROS generation and membrane damage suggested that protein-capped and bare silver nanoparticles demonstrate distinct mode of action. These findings were strengthened by the TEM imaging along with silver ion release measurements using inductively coupled plasma atomic emission spectroscopy (ICP-AES). In conclusion, our results illustrate that presence of protein shell on silver nanoparticles can decrease their bactericidal effects. These findings open new avenues for surface modifications of nanoparticles to modulate and enhance their functional properties.