Update: In Adguard turn the blocking method to NXDOMAIN so it won’t give this error. It still gives a warning that “you’re using a VPN”. Edit: I am on iOS 26.
Broader Context: All Indian Banking apps have been instructed to not allow the use of VPN slot while using a banking app. The Central Bank has also ordered to disallow usage if Developers Options are turned on. Apart from that globally all banking apps require Google Play Services and Boot-loader to be locked. I also found on some reddit post that they are not allowing the use of a 5 year old + phones for banking.
It could also be that the app is looking at parameters other than the hash (which would probably be that of the certificate authority rather than the domain’s certificate), like the CN, which is potentially fakeble. You can also try to mess with the APK file, maybe find the strings associated with the certificate check and replace them. I won’t fault the app’s authors for making such a check though, MITM is so easy to do without certificate validation.