printing a block of text that matches a pattern

awk '
{
  if (/-------------------------------------------------/) {
    if (hold ~ /INFO/) {
      print hold;
    }
    hold="";
  } else {
    hold=hold "\n" $0
  }
} 
END {
  if (hold ~ /INFO/) {
    print hold;
  }
}' file

This uses a 'hold'ing variable (ala sed) to accumulate lines between separated blocks; once a new block (or EOF) is encountered, print the held value only if it matches the /INFO/ pattern.

_{(re: the older comments, I deleted my previous inadequate awk and perl answers to clean up this answer)}

Should be quite easy with awk if you don't need all - in the output:

awk -vRS='----' '/banana/{print}' file

alternatively pcregrep:

pcregrep -M '^-+[^-]*banana[^-]*' file

If you don't mind the missing leading empty lines, here's a sed solution:

sed '/---/b end                      # if line matches pattern branch to : end
//!{H                                # if it doesn't match, append to hold space
$!d                                  # and if not on the last line, delete it
$b end                               # if it's the last line branch to : end
}
: end                                # label end
x                                    # exchange hold buffer and pattern space
/PATTERN/!d                          # if pattern space doesn't match, delete it
' <infile