Make Curry Paste A - Blend onion, garlic, and ginger to a smooth consistency. Transfer to a bowl. Set aside.
Make Curry Paste B - Blend tomato and dried red chili to a smooth consistency. Transfer to a bowl. Set aside.
Set the SAUTE mode of the instant pot for 15 minutes. Add oil to the inner pot.
Once the oil is smoking hot, it takes less than 1 minute, add cumin seeds and bay leaf followed by Curry Paste A prepared earlier.
Saute the paste for 2 minutes or till it turns light brown. Keep stirring while sauteeing the masala.
Next, add Curry Paste B, turmeric, coriander powder, red chilli powder, and salt. Stir to combine. Saute for 5 minutes or until oil starts to separate from the masala paste.
Add the peas, paneer, and water. Stir to combine. Seal the instant pot with a lid.
Select the pressure cook mode. Set timer for 5 minutes. Set the steam valve to the SEALING position.
After 5 minutes you can either release the pressure manually or wait for natural release. Once the steam is released open the lid of the pot. Add Kasuri methi, garam masala, and fresh coriander leaves. Stir to mix.
Serve Matar Paneer warm with naan, paratha, or jeera rice.