Twenty public, private and foreign banks participated in the survey, which together represent 64 per cent of the banking industry, as classified by asset size.
Meanwhile, 71 per cent private and 50 per cent foreign bank respondents stated that their bad loans have increased during January-June.
Metal, infrastructure and textile industries have recorded high level of NPAs with at least 50 per cent of total respondents stating the same.
In the next six months (Jul-Dec 2017), participating banks expect sectors like infrastructure, automobiles and pharmaceuticals to drive credit growth.
Lenders also expressed hope that amendment of the Banking Regulation Act along with Insolvency and Bankruptcy Code will help in the resolution of stressed assets, which have ballooned in the recent past.
The banks suggested easing of provisioning norms for stressed assets and strengthening of legal infrastructure to facilitate quicker disposal of bad loans cases.
"The survey has been conducted at a time when NPAs are at a worrisome position, especially for the public sector banks," Ficci said in a statement releasing the survey.
The participating banks gave several suggestions to deal with the stressed assets. One is to set up industry committees to determine the valuation of large stressed accounts and get big PSUs in respective sectors to bid for the said accounts at such valuations.
About 35 per cent reported tightening of credit standards for large enterprises during the first half of 2017 and about 40 per cent expect further tightening in the next six months.
During January-June, a majority (75 per cent) of the respondent banks have reduced their Marginal Cost of Funds based lending rate, with 45 per cent of banks reducing it by more than 50 basis points, aided by adequate liquidity and low-cost deposits.
The survey observed that infrastructure sector continues to witness the largest increase in long term loans.
A majority welcomed the suggestion from the RBI about setting up of specialised Wholesale and Long Term Finance Banks.
Bankers' views were also sought on consolidation of other public sector banks post SBI merger.
"Some participating banks suggested exploring avenues of privatisation alongside merger of PSBs," Ficci said quoting the survey's findings.
Views were also sought on the idea of Bank Account Number portability that had been suggested by former RBI deputy governor S S Mundra.