There is a hierarchy of best practice when releasing fish.
First, the best way to release fish is to avoid handling of the fish to prevent loss of scales or mucus.
This is accomplished by keeping the fish in the water and removing the hook with a pair of pliers (see removing the barbs on your hooks to facilitate this process).
Barbless hooks make this easy with a flick of the wrist to remove the hook and then the fish can swim away.
If conditions prevent the safe release of the fish because of a rocking boat or it is difficult to reach the fish in the water, lifting the fish out of the water to use the pliers is the next step.
This works well for small undersized fish as they can be flicked off the hook and back into the water without being touched.
If it is a larger fish or if this is not practical then using a rubber mesh net (while in the water) to hold the fish for release is preferable.
If you must handle the fish, please don’t use a wet cloth or sponge.
The material can easily remove the protective mucus and make the fish susceptible to infection and mortality.
Wet hands are the preferred way to handle your fish, while it is in the net or on a cool wet surface.
Use the towel on your hands afterwards. The fish may swim away strongly but still die later if its mucus has been removed and infection sets in.