"He said he wanted to keep it anonymous because down the road, he said, 'if I help you, Kim, it's better nobody knows about your donations'."
Mr Dotcom's estranged wife, Mona, is expected to support his version of events when she gives evidence today.
Banks' lawyer, David Jones, QC, asked Mr Dotcom if he had control over her and other members of his staff due in court.
"If I could [control her], she would still be with me now. We wouldn't be separated," Mr Dotcom said.
Mrs Dotcom was originally scheduled to take the witness stand straight after her estranged husband, but the order of witnesses was changed.
Mr Jones suggested Mr Dotcom's version of events was a lie and no discussions about keeping the donation secret had taken place.
Mr Dotcom said that was wrong. "He's a liar if he says that," he said of Banks.
Banks, the Act Party's sole MP, is defending a charge of filing a false electoral return in 2010 by knowingly recording political donations from Mr Dotcom and SkyCity as anonymous, when he knew who the money had come from.
The allegations relate to two $25,000 donations from Megastuff Ltd on Mr Dotcom's behalf in June 2010 and $15,000 from SkyCity that year.
In early 2012 Mr Dotcom was arrested on suspicion of copyright infringement and spent time at Mt Eden Prison. Attempts to get help from Banks, whose Epsom electorate covers the prison, got nowhere.
Mr Dotcom said he saw publicity about SkyCity's donation to Banks and wanted to tell the public Banks was lying about declaring the money he gave him as anonymous.
But Mr Jones suggested Mr Dotcom's "story" about Banks' request for two cheques was "rubbish".
Mr Jones also suggested Mr Dotcom went public because he was angry with Banks and the Government and wanted revenge on Banks.
Mr Dotcom denied that: "I think that has nothing to do with me coming out about the donation."
He said he received a thank-you call from Banks about the cheques.
Mr Dotcom's former bodyguard Wayne Tempero told the court he had phoned Banks to see if the cheques had cleared and received confirmation they had.
At the June 2010 meeting, he said Banks told him as he went to fetch the cheque books: "Don't make it one cheque for 50, make it two cheques for 25,000 each."
Earlier in the day, Michelle Boag, who helped Banks' 2010 team with fundraising, said she never heard him mention Mr Dotcom and did not know who he was until early 2012.
Both she and campaign treasurer Lance Hutchison described Banks as a man of integrity and honesty.
