A synergistic electronic interaction between the constituent metals in a bi/multimetallic system fine-tunes its catalytic property to be enhanced compared to those of the individual metal analogues. Such a proposition toward enhancing the catalytic activity of precious Rh metal by otherwise inactive Ag is done here in a cost-effective dilution method. The generated heterostructure of Ag/Rh independently drives two industrially important model reactions: 4- nitrophenol (4-NP) reduction and hydrogen peroxide (HP) decomposition. An impressive catalytic activity parameter for 4-NP reduction (256.67 s⁻¹ g⁻¹) with hydrazine and HP decomposition (39 × 10⁻³ min⁻¹ g⁻¹) at room temperature ensures the importance of the “ensemble effect”. Spectroscopic evidence also certifies the dilution range to justify improved catalytic activities relating to the ensemble effect. Moreover, our theoretical study rationalizes the experimental observation where the enhanced charge transfer or occurrence of charge separation within the bimetallic system is responsible for the chemical reactivity of these bimetallic systems. Finally, the thermodynamics of formation of bimetallic nanoparticles finds support from the experimentally observed results and electronic interactions between Ag and Rh for improved catalytic activity that complies with spectral information.