Microgrids suffer from issues namely protection blinding, sympathetic tripping. Microgrids operate in which differs from the conventional power system. Micro-grids operate in grid-connected mode or islanded mode of operation. In islanded mode microgrids utilize distributed energy resources that are renewable such as solar, wind, along with energy storage systems. In both, the modes of the system undergo various challenges such as protection blinding, sympathetic tripping, or short circuit current in power electronic interfaced generation. This work focuses on the analysis of fault in both modes of operation as well as the issues that are specific to a microgrid. Hence adaptive settings of the relay are required to switch over under the different modes of operation. This work utilizes an adaptive central controller for MG protection. Hence the sensed data from the system is fed to the controller and managing the relay operation which is the IDMT relay. This work focuses on the relay setting and plug set for the relays under modes of operation. The detailed analysis is carried out in IEEE 13 bus system and adaptive relay setting calculation for adaptive centralized MG protection is carried out.