The State Bank of India informed the country's refiners that it will stop handling payments for Iranian crude oil starting in November, Reuters reported.

The bank's decision follows the U.S. government's announcement that it will reinstate sanctions on Iran after having withdrawn from the 2015 Iran nuclear pact.

While India does not follow U.S. sanctions policy, companies that have business ties with the U.S. often comply with U.S. sanctions policy to avoid penalties.

The U.S. government's move gives market participants until Nov. 4 to unwind Iranian crude oil contracts, but one Indian refiner told Reuters that Iranian supply disruptions could begin sooner.

"[Oil] loading will be affected from end-August under the current mechanism unless a new payment route is established," Indian Oil Corp. Ltd finance chief Arun Sharma said.

Ahead of SBI's announcement, Reliance Industries Ltd., which owns the 1.4 million barrel-per-day Jamnagar refinery, said it would halt Iranian crude oil purchases.

European refiners said last week that they plan to wind down Iranian crude oil purchases as a result of U.S. sanctions.