Gently mix the grated potatoes, grated paneer, chopped green chilies, a pinch of salt, a pinch of garam masala, and 2 tablespoons of cornstarch in a bowl to form a soft, non-sticky dough.
Shape the dough into round balls. Lightly roll each ball in extra cornstarch, dusting off the excess. This keeps them intact when frying.
Heat oil in a deep pan on medium heat. Slide the koftas in gently. Fry until they are golden brown and crispy on the outside, then drain on paper towels.
In another pan, sauté onions, ginger-garlic paste, cashews, and tomatoes in butter until completely soft and cooked through.
Let the onion-tomato mixture cool, then blend into a silky-smooth puree. Pour back into the pan, add spices, and simmer until oil droplets begin to separate at the edges.
Stir in cream and crushed kasuri methi. Pour the hot gravy over the fried koftas in a serving dish just before serving.