making EditText to show only two decimal places

You can simply use DecimalFormat

DecimalFormat format = new DecimalFormat("##.##");
String formatted = format.format(22.123);
editText.setText(formatted);

You will get result in EditText as 22.12

Here is a solution that will limit the user while typing in the edit text.

    InputFilter filter = new InputFilter() {
    final int maxDigitsBeforeDecimalPoint=2;
    final int maxDigitsAfterDecimalPoint=2;

    @Override
    public CharSequence filter(CharSequence source, int start, int end,
            Spanned dest, int dstart, int dend) {
            StringBuilder builder = new StringBuilder(dest);
            builder.replace(dstart, dend, source
                    .subSequence(start, end).toString());
            if (!builder.toString().matches(
                    "(([1-9]{1})([0-9]{0,"+(maxDigitsBeforeDecimalPoint-1)+"})?)?(\\.[0-9]{0,"+maxDigitsAfterDecimalPoint+"})?"

                    )) {
                if(source.length()==0)
                    return dest.subSequence(dstart, dend);
                return "";
            }

        return null;

    }
};

mEdittext.setFilters(new InputFilter[] { filter });

e.g., 12.22 so only 2 digits before and two digits after the decimal ponit will be allowed to be entered.