No. It’s not banned.
But it’s an essential part of train etiquette in Japan. The Japanese people are generally very polite and talking on the phone in the train is culturally considered impolite.
Riding the trains as a foreigner in Japan, you’ll immediately notice the signs everywhere. Little pictographs are showing it’s wrong to talk on the phone while on the train.
It’s a bit strange… since talking is allowed. Well, quietly talking. It’s equally impolite to be loud and boisterous on the train.
That’s not to say the Japanese are against fun. You’ll see friends laughing from their conversations.
But they are very considerate of others, so you’ll rarely find them talking on their phones while riding the train.
You will see them texting, reading the web, or listening to music — when they aren’t sleeping.
Here is a fantastic video summarizing Japanese train etiquette.