 This was undertaken on the recommendation of the All-India Rural Credit Survey Committee although Deshmukh had been opposed to plans for nationalising the bank when he was the RBI Governor.The nationalisation of insurance companies and the formation of the Life Insurance Corporation of India was accomplished by him through the Life Insurance Corporation of India Act, 1956.He resigned over the proposal of the Government of India to move a bill in Parliament bifurcating Bombay State into Gujarat and Maharashtra while designating the City of Bombay a Union Territory.