This can be reproduced on a clean install of 3.2.7 without any custom extensions.
Ban any user, and provide a reason for "reason for ban" and "reason shown to the banned".
Confirm ban, and verify that the user is listed as a banned user.
Now try to log in as the banned user.
This does not work, and it generates an error message on top of the login form:
The submitted form was invalid. Try submitting again.
The ban reason is not shown anywhere and the user has no clue what's happening, tries to create a new account, and this generates overhead for mods to keep up banning new accounts and/or emailing the banned user to explain what's happening.