She allegedly threatened to release the videos if he did not pay her according to the police.
The woman appeared in court Wednesday and was jailed for 14 days after bail application was refused. Chinmayanand was arrested last week but he denied all the accusations of sexual abuse.
Chinmayanand, 73, is a former lawmaker from the ruling Bharatiya Janta Party and represented northern state of Uttar Pradesh.
"Mr. Chinmayanand received a text on his mobile phone demanding 50 million rupees (US$700,000), or they would make obscene videos of him publicly available. But we knew that there was nothing like this," said Om Sign, Chinmayanand’s lawyer.
They filed a case of extortion against the woman and three friends on Aug. 24.
The victim said previously that she recorded Chinmayanand’s abuses through a hidden camera in her glasses and handed over 43 such videos to the police.
Since allegations against the woman surfaced, the case has been transferred to a special team of investigators.
She was a student of one of the several colleges run by the politician. The abuse lasted for months she said claiming that he showed her a video of her bathing and blackmailed her into having sex.
Chinmayanand had been charged with “misusing authority” for sex, a lesser offence than rape, and for stalking and criminal intimidation.
The case is the second high profile arrest in years of a member of the Hindu nationalist ruling party for alleged sex crimes. The previous case sparked widespread outrage and protests across the country.
In the previous case in 2018, Kuldeep Singh Sengar, a BJP lawmaker also from Uttar Pradesh, was arrested for his alleged role in the gang rape of a 17-year-old girl.
Federal police opened a murder investigation against Sengar after a truck crashed into the young woman’s car two months ago. Sengar denies rape and any involvement in the car crash.