Whenever anyone places a banner, it turns into a grass block, and in the hotbar turns into a grass block as well. Is this intentional or a mistake? Another thing that might happen is it disappears, in the inventory and in the server. Before placing: After placing (Its not obvious what happened but try it):
I know why the item disappears while in your inventory, as it has happened to me as well. Usually when that happens, the item is thought of by the game to not be in your inventory for a reason (such and such), and what I personally do to solve this, if the item is easily re-gettable, I just get the same item, and place it. Usually works well for me. I do not know of the grass block issue though. I would also suggest using the right format which can be found here: http://itsjerryandharry.com/threads/tutorial-how-to-report-bugs.26/
The reason the item is removed from your inventory in most cases is because it is considered as some form of NBT, which is blocked in order to prevent - or at least reduce, the creation of god items. The only work-around I've found so far is to use a crafting table in order to create the materials and banner, and make sure the item remains in your inventory.
Wait wait wait. The grass block issue only happened once. The other times I tested it, it disappeared and the banner was never placed. I did not accidentally drop the item either, as that would be stupid. Also, here's a tip for life: PLAY UNDERTALE PLEASE
Items with metadata being removed has been known for a long time, it was a temporary solution to disable "god items". I have now finally come around to making a solution, which will be implemented during the next server restart.