Can interest funds be utilized to pay banking charges?

You are utilizing the bank facilities and therefore are being charged a fee by the bank. They are entitled to charge you fees in lieu of the services that they are providing hence, the said transaction is in order. These charges are made known to the account holder from the very beginning. By continuing to utilize their facilities (after being informed of these bank charges) is tantamount to tacit approval from your side that you have accepted to pay the relevant charges. It is therefore not permissible to settle bank charges with interest funds.