Chemically functionalized maleic anhydride (MAH)-grafted polypropylene matrix has been used (in place of polypropylene as matrix with compatibilizer) to process banana fiber/chemically functionalized polypropylene (BF/CFPP) composites, without using any compatibilizer and without any fiber modification by Palsule process. Fiber/matrix interfacial adhesion generated, in-situ, due to interactions between BF and the MAH of the CFPP matrix has been established by Fourier transform infrared spectroscopy and scanning electron microscopy. Mechanical properties of the BF/CFPP composites developed by Palsule process with in-situ fiber/matrix interfacial adhesion in this study have been found to be higher than those of the matrix and it increases with increasing amounts of fibers in composites, and are better than properties of literature reported BF/polypropylene composites processed with compatibilizers. Measured modulus of BF/CFPP composites compares well with values predicted by rule of mixtures, Hrisch model, Halpin-Tsai equations and its modified Nielsen version, and with Palsule equation. The feasibility of developing natural fiber/MAH grafted polyolefin composites by Palsule process without using any compatibilizer and without any fiber treatment is demonstrated. © 2013 Taylor and Francis Group, LLC.