How the Jacob Diamond Went from a Disputed Sale to the RBI Vault
The Jacob Diamond, a 184.75-carat polished stone, is remembered less for its size than for a path that ran from a disputed royal sale to a shoe, a desk and finally the vaults of the Reserve Bank of India. Believed to have originated in the Golconda diamond region, the rough stone is thought to have weighed more than 400 carats before it was cut into a rectangular cushion shape with 58 facets.
In 1891, the Shimla-based jeweller Alexander Malcolm Jacob tried to sell it to Mir Mahboob Ali Khan, the sixth Nizam of Hyderabad. The transaction collapsed in public dispute: the Nizam reportedly said 'Na Passand', or not approved, while Jacob insisted a sale had been intended. The resulting legal battle drew wide attention, damaged Jacob's finances and reputation, and left the Nizam with a gem he came to regard as unlucky.
The diamond was hidden away — according to prominent accounts, inside an old shoe at Chowmahalla Palace — until the Nizam's son, Mir Osman Ali Khan, found it after his father's death in 1911. Rather than setting it in jewellery, the new Nizam reportedly used it as a paperweight. After independence, the gem became part of the disputed Nizam jewels; in 1995 the Indian government acquired the collection, and the diamond now rests in the RBI's Mumbai vault, appearing only in rare exhibitions.
What the Jacob Diamond's Century of Odd Turns Actually Shows
A Failed Sale Turned the Diamond Into a Liability
The 1891 breakdown was not chiefly about the stone's value. It became a public humiliation for the Nizam, who was drawn into court proceedings, and a reputational disaster for Jacob, who escaped fraud charges but lost the relationship and the deal. The diamond's supposed bad luck flowed from that episode rather than from any earlier history.
Why the Nizam Kept the Gem He Did Not Want
The outcome was paradoxical. Court proceedings and financial settlements left Mahboob Ali Khan with the diamond for roughly the sum he had already deposited, yet he hid it rather than displaying it. That reaction shaped the next phase of the story: the gem was treated as a reminder of scandal, not as a trophy.
State Custody Changed the Diamond's Role
The later ownership fight was different in kind. Private trusts explored selling the Nizam jewels abroad, but the Indian government opposed the move on heritage grounds. The 1995 purchase converted a disputed family asset into a state-held cultural object, which is why it now sits largely out of public view in the RBI rather than circulating in the market.
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