Financial markets globally are experiencing competitive monetary easing. In this context, India stands as land of opportunities in attracting institutional investors, especially the foreign institutional investors (now called as foreign portfolio investors). The purpose of this paper is to critically analyse corporate laws in India relating to institutional investors in the context of corporate governance. The study reports that institutional investors role is different from that of other investors in ensuring compliance with corporate governance norms. In spite of incentive to encourage institutional investor activism, legal and business hurdles are acting as deterrence to greater institutional investor activism. An implication of this paper is that it addresses the issue of legislative response in ensuring greater activism on the part of institutional investors.