There are at least three occasions when official representatives of the government or major institutions have referred to the government using the money deposited by citizens in banks for development. None of these statements have been refuted by any official government spokesperson.
This here is Sambit Patra on the 19th of November 2016
(Around time 0:16): "... where would this money go? This money is deposited in Indian bank. Not in someone's personal account. This money would be for the poor people's affair. It would be for infrastructure. It would be for roads..."
On the 5th of January 2017, in an interview published in The Hindu Businessline, Pankaj Patel, President of the FICCI says ‘Post demonetisation, money with banks should be used for infra projects’. The last line of the first question of the interview:
This large amount of money that is available with banks has to be used for infrastructure projects in a big way, and it can help increase demand.
Today, Nirmala Sitharaman has said that the money deposited in the banks can be used by the government for developmental activities.
— News18 (@CNNnews18) January 7, 2017
The money deposited in banks belongs to the account holders. The bank further gives it out on credit and earns an interest on the loans generating revenue for themselves, and passing some on to the depositors. The money available for the banks to use is the money it generates as interest from loans. The government doesn't use any of this money. Funds available to the government are those raised from taxes and such or any revenue the RBI makes as profit and transfers to the government.
Banks are actually going to be in trouble for revenue, as deposits in banks have gone through the roof, while the demand for loans is still low. So banks will have to pay out interest to depositors, but their means of raising interest by lending money have not increased in proportion. In a situation like this, it is alarming to hear that the government would use the money in banks for anything - development and infrastructure or otherwise.
Given the complete impunity with which the government has disregarded citizen rights during demonetisation, is the next shock going to be losing our funds to the government spending sprees?
Modi sarkar needs to clarify. Fast.