Dhaka is bound and crisscrossed by a network of rivers, canals and large tracts of flood plains. However, this megacity is growing in an unsustainable manner and jeopardizing the social and environmental values. Citizens and management authorities are alarmed with the rapid rate of depletion of wetlands resulting in an increase in the frequency of floods, drainage problems, loss of agricultural activities, and destruction of aesthetically pleasant environments. The planning, development and management of Dhaka involves multiple government agencies. In addition, a large number of non government organizations and environmental groups are working relentlessly. Dhaka Metropolitan Development Plan (DMDP 1995-2015) contains policies on conservation of the flood plain and detention areas, and the enactment of the Water Body Conservation Act has strengthened the legal aspects for securing wetlands. However, a rapid rate of loss of wetlands demonstrates that the pertinent institutions have failed to protect them. This research aims to identify the underlying reasons for the institutional weaknesses. The barriers for application of planning and legal tools are viewed from three perspectives; (i) institutional shortcomings and weaknesses in protecting wetland loss, (ii) level of coordination among the different institutions both in the public and private sectors, (iii) nature and strength of external forces that impede the desired course of improvement.