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Heat oil in a pan over medium heat. Add cumin seeds, a cinnamon stick, and a bay leaf. Stir well for a few seconds until fragrant.
Add chopped green chili and ginger-garlic paste to the pan. Sauté for about a minute.
Add finely chopped onions to the pan and sauté until they turn golden brown.
Add salt to taste, cashew powder, cumin powder, coriander powder, turmeric powder, and chili powder. Mix everything well and cook for a minute.
Pour in 1 cup of water, stir well to combine, and let the mixture cook for a few minutes until it starts to thicken.
Add yogurt and tomato puree to the pan. Stir well to incorporate everything, and let the gravy cook for about 10 minutes, stirring occasionally, until the oil starts to separate.
Gently add the paneer cubes to the gravy. Crush kasuri methi between your palms and sprinkle it over the paneer. Stir gently, cover the pan, and let it cook for 2 minutes.
Transfer the Paneer Masala to a serving bowl. Drizzle with heavy whipping cream and garnish with freshly chopped cilantro. Serve hot with naan or rice.
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