On the contrary. The money would still be printed, it would just be absorbed back in to the bank's finance books upon repayment of the loans.

If everyone paid back all their debts quickly, then banks would have very few outstanding loans, and as such, have much lower exposure to risks of defaulting whilst also be collecting very little in the way of interest. I suspect they would address this by starting to offer larger and riskier loans, which would make the problem worse rather than better.