Add the peaches and water to a blender and blend until smooth. Pour this into a dutch oven over medium heat along with the onion masala and spices.
Cover with a lid and cook for 5 minutes.
Remove the lid, add the bell pepper and paneer, and simmer for 4 to 5 minutes or until the paneer is warmed through and the bell peppers are tender.
Stir in the diced peaches and garnish with cilantro.