Abstract: The present invention provides blue coloured aqueous dispersion of silver nanoparticles and process for preparation thereof. The present invention also provides compositions comprising blue coloured dispersion of silver nanoparticles. The blue coloured aqueous dispersion comprising silver nanoparticles wherein dispersion is characterized by—having plasmonic peaks in the range 330-335 nm and 650-720 nm combined with missing plasmonic peaks in the range 390 to 410 nm and 410-500 nm in UV-Vis spectrum,—the dispersion having silver nanoparticles of anisotropic shape with majority of particles (>65%) having equivalent diameter in range of 0.5 to 6 nm,—Molar extinction coefficient greater than 10.1 preferably in the range of 10.1 to 15.7 mM?1cm?1 at wavelength of maximum absorption in the range of 650-720 nm,—Dispersion stability of at least 15 months,—Minimum Bactericidal Concentration (MBC) lower than 0.10 ppm preferably in the range of 0.055-0.099 ppm.