A sliced red banana is the result of using a knife or any bladed weapon on a red banana. When eaten, the sliced red banana heals 5 Hitpoints; the same amount as the original fruit. The message box also states "You eat the sliced red banana. Yum.".
Sliced red banana used in preparing the snake for King Awowogei during Recipe for Disaster. After the quest is complete, there is no further use for red bananas, nor can any more of them be obtained.