In a sauté pan, heat the oil over medium-high heat. Add the yellow onions and cook until translucent, 5 to 7 minutes. Add the red chile powder, turmeric, cilantro, bay leaves, tomatoes, and tomato paste and cook until the spices are aromatic, stirring occasionally to prevent scorching, about 7 minutes. Season with salt, add 1 cup water, and stir until a gravy is formed, 12 to 14 minutes. Reduce the heat to medium-low and continue to simmer gently until the sauce is thick enough to coat the back of a wooden spoon, about 5 minutes.