The effective and long-term operation of economies, as well as the reduction of risk and uncertainty, depends on institutions, which are composed of both formal and informal norms and the means by which they are enforced. The IPCC has acknowledged the significance of institutions in minimizing the negative impacts of climate change on people during the era of catastrophic events and climate change. Char are riverine regions and sand-bars in the transboundary river basin of the Ganges, Brahmaputra, and Meghna which are extremely vulnerable to climate change and its effects. The Assam Human Development Report (2014) shows that Char is the most vulnerable area in Assam, the location of one of the state’s poorest populations. This chapter goes into great detail on how institutions help a society become less vulnerable to climate change by increasing the capacity of its citizens for adaptation and how ethnic differences may affect the institutional quality. In addition, the study assesses the institutional quality in char regions of Assam using the Adaptive Capacity Wheel (ACW) approach. ACW is a normative economic research that uses a value-based methodology to quantify qualitative data. 49 stakeholder interviews have been carried out in 16 char villages, which are home to diverse communities and are dispersed among four districts of Assam. The study finds that informal institutions have a key role in enhancing formal institutions and contributing to overall institutional quality in terms of vulnerability reduction. The quantitative evaluation of institutional quality demonstrates the variability found in the many dimensions of institutions in various locations within various populations. In comparison to other char-dwelling communities, the Mishing community in these char locations has a stronger informal institutional structure and is more institutionally adaptable to climate change.