Cut the paneer into 1/4 inch cubes. If working with the paneer cubes (available in grocery stores), cut them into smaller cubes. Keep it aside.
Heat oil in a medium non stick saucepan.
Add chili flakes and cook for 15 seconds. Next add chopped onions and cook for 5 minutes. Now add garlic, green chili and black pepper and cook for 30 seconds.
Add in all the sauces and cook for 2 minutes or until it comes to a boil. (This shouldn't take long)
In the meantime, take a small bowl and add cornflour and water to it. Dissolve the flour. Add this to the boiling mixture in the pan and cook for 2 minutes or until it comes to a boil. Add salt to taste.
Finally add the paneer cubes and let it cook for 2 minutes.
Remove from heat and transfer to a serving dish. Garnish with chopped cilantro. Enjoy with fried rice, stir fry noodles or simply steamed rice!