Alipay, China's largest third-party payment service provider, has teamed up with the country's policy bank to offer interest-free loans to poor college students.

Owned by Alibaba Group Holding Ltd's finance arm Ant Financial, Alipay said recently it is expected to help China Development Bank offer as much as 18 billion yuan ($2.78 billion) worth of loans to students this year.

The wholly State-owned policy bank is responsible for offering the cash and reviewing contracts with borrowers, while Alipay is in charge of the process, from helping students to apply for the loans, setting up accounts that can receive the loans, right through to repaying the borrowed money after students' graduation from college.