"My reputation was in tatters," RB Sinha told the BBC, saying rumours he died of a heart attack spread after an incorrect report of a tax raid on him.
India's recent ban of old 500 and 1,000 rupee notes was a move against illegal cash holdings, but it sparked chaos.
Most reports of deaths and suicides have been all but impossible to verify.
Prime Minister Narendra Modi has asked people to remain calm and give the government 50 days to fully replace the banned notes with new ones.
The government says the move was to crack down on corruption and illegal cash holdings known as "black money" - and this has included tax raids to unearth undeclared cash.
On Tuesday local media said an income tax raid on 65-year-old Dr Sinha's home in the district of Chhapra in Bihar state yielded 60 million rupees ($888,890; Â£714,290) in illegal cash.
"This was entirely incorrect. A local channel even sent their reporter and cameraman outside my house and shot some footage. Then the news spread like wildfire on social media and WhatsApp," he said.
"Things became worse when rumours started floating in the district that I had died of a heart attack following the raid.
"So I held a press conference at my clinic on Tuesday to declare that I am healthy and alive and there was no income tax raid on my residence."
Dr Sinha said he had sent legal warnings to two local channels and a news site for carrying the false news.
There have been media reports that up to 33 people have died  "due to demonetisation" since last Tuesday when the old high denomination notes were scrapped.
The victims include people who have reportedly suffered from heart attacks while standing in queues outside banks, and other unable to pay for treatment at hospitals for lack of cash.
An Indian doctor has held a press conference to declare he is alive and that reports of his death in the country's cash crisis were exaggerated.