The story of a diamond has more faces than a cut diamond. A diamond it not a commodity despite being a scarce natural resource. There is no international standardisation or exchange for information about the stone. People turn to a private newsletter called Rapoport published out of New York to get diamond news. You can be sold glass that mimics a diamond by some of the top jewellers in the world and European bankers have long ceased dealing with people who come calling in the names of diamond traders.

In this unregulated world, individual vendors get to decide the price as it is impossible to fix spot pricing for diamonds. Decoded, it means investors have no way to get a read out on the price. India’s biggest financial fraud is based on trading in a product that has no international base. Let that sink in. “Standardisation of commodities is already a problem with developing countries - no one will touch which is out of the system,” a financial analyst tells me. Didn't our bankers know this?

I started reading and watching the Punjab National Bank (PNB) Nirav Modi – Mehul Choksi financial scandal with a deep sense of disbelief. India’s second-largest public-sector lender PNB said earlier this week that two junior officers at a single branch illegally granted $1.77 billion in fraudulent loans to companies. Many of these companies were led by billionaire jeweller Nirav Modi reportedly in hiding in New York.

This is India’s biggest banking fraud and the bank wants us to believe their poppycock about two junior officers. A few more officials have been identified and arrested, but the bank is fighting shy of calling out the political connections of the Choksi-Modi duo who planned and fled the country last January. They were tipped off. There is mounting information – which must be proved - pointing to the swindle dating back to the initial years of United Progressive Alliance (UPA) led by the Congress party. That in no way absolves the National Democratic Alliance (NDA) led by the Bharatiya Janata Party (BJP) of its responsibilities key among which was to fight corruption.

The reality is that some of India’s top banking institutions including the PNB have been fooled or allowed themselves to be fooled in what can only be called the Great Indian Job. This is not an ordinary financial swindle story. With every passing minute, it is getting clear that this is about a parallel – and submerged - banking system within banks run with complicity, connections and let’s face it, brutal courage. This kind of courage is politically blessed and promoted. It breaks systems in a democracy - that is their intent. A democracy without systems isn't one.

The result? The damage done to India’s banking and financial industry will be deep and recovery will be long. This story shows in vast instances in time and distance (some say over 15 years) that there was no industry, no regulators, no process and all dazzled by stones some of which could be diamonds. If the government does not act swiftly to bring the crooks to book, it will be letting down an entire generation of first-time voters who reposed faith in a changed system in 2014. It also means Indians who have allowed this kind of filth to continue – and this includes many in the financial industry, bureaucrats, politicians, media persons – questions will also be asked of them as this scandal unravels.

As the story progressed and theories burgeoned, I picked up the phone in search of reactions from people in Switzerland’s banking and financial industry. What they said shocked the daylights out of me. “Bankers don’t know anything about diamonds – in fact no serious banker in Europe touches diamonds,” said one.

Banks is Europe have stopped dealing with diamond traders and people in this sector for over six to seven years, said another. Blood diamonds, I asked. “That too, but how do you know what you are looking at is a real diamond, the carats, the clarity and all the nonsense that is fed to people - both rough and polished is a complete no no for us,” he said. Images of raids and seizure of gold and diamonds by income tax officials and the enforcement directorate flashed through my mind. Do they even know the real worth of what they are seizing and confiscating? There is nothing to celebrate.

There’s worse. Despite being coveted, the stone is not traded through a commodities exchange as it isn't one. There is a debate about how to make it a commodity, but each piece is unique making standardisation very difficult. Geneva is a major platform for commodities trading. Gold, silver, platinum are regulated and diamond is not because each stone is unique. Commodities where prices are locked in also include crude oil, livestock, corn and soybeans, for example. New commodities struggle to enter the standardised market every now and then, but the diamond has yet to make the cut. So, what do people in the business do when they want to check out the diamond market? They wait for news from Rapoport, a private company-run newsletter. Read here. In some cases, they get news from national diamond exchanges which have no international currency or credibility. Trust often turns to rust.

From the 1800s to the turn of this century, the De Beers Family of Companies had a monopoly on the business and they pretty much did what they wanted to. As that monopoly ended, it gave rise to diamond merchants of the likes of Choksi and Modi to play by their own rules, take advantage of an unregulated markets and gullible clientele. The Indian duo may have fancied themselves as the next De Beers. They did manage to fool an entire nation and its regulatory mechanisms into submission. The duo and their accomplices have figured out the faults in India’s banking and financial industry and blasted holed across the system. Their address books must be priceless gems.

If it takes me, a complete outsider, to understand why there is no international diamond market, why price fixing is par for the course and why diamond traders have to be kept at arm’s length especially by banks, am I to believe that India’s top bankers, bureaucrats and politicians were unaware of this while a top nationalised bank continued to lend money to a bottomless pit? I am told the ecosystem patronised by the Congress party is so deep that the BJP is trying to keep its head above waters and turn the ship around. To them I say, you cannot lead a nation into the deep seas and ask it to paddle when hit by a massive storm. This is a moment of torment and trial for the government.