Cut out any top growth that has rotted away--even if it means cutting it down to the pseudobulb. It should eventually recuperate. The fact that there is a green sprout at the base is a good sign. The mother plant still has a good chance of regrowing a new top. Keep it warm, sunny, on the drier side until things pick up. Good luck!

fertilize it and water when dry it will grow fine. see http://www.greenhousebusiness.com/bananaplants.html

Here is a link that might be useful: Banana tree info