This paper presents an optimal allocation and sizing of shunt capacitor in Radial Distribution Network (RDN) for minimizing the real power loss and total cost of the system. Loss Sensitivity Factor (LSF) approach is utilized to identify sensitive buses for capacitor placement and optimal size of shunt capacitor is determined by using Particle Swarm Optimization (PSO) algorithm and minimize the total real power loss objective function. As a result it is observed that net saving is increased, enhance the voltage profile and improve power factor after capacitor placement. The proposed approaches have been demonstrated on standard 10-bus and 34-bus radial distribution systems. The obtained numerical results of the proposed approach have been compared to the other intelligent techniques.