Hey Nitesh, No, Grab is not banned in Bali by govermnet. But some hotels and taxi groups put posters that it is banned so you will hire their taxis at high rates. You can also use Uber there. Hope this would help you.
I was in Ubud in the month of September and these app based cab services were working just fine. Uber is definitely banned because they want to promote local business more. If you traveling in a group in Ubud, local cabs through transport offices will be cheaper for you, but GoJek and Grab are your best bet if you are traveling alone. And remember to always bargain!
I'm staying in ubud and the hotel lobby tell me it's banned. I hate using the local taxis - they charge me 5 times more than gojek - never staying at this hotel (Seres springs) again. Bikes and scooters are allowed.. its what I've been told...