Heat oil, add bay leaf and onion. Fry for 3-4 minutes. Add ginger and garlic and fry for another minute. Add mustard and cumin seeds. The potatoes should be sliced, and the tomatoes and capsicum cut up. Add these, mix well, and cook for 4-5 minutes, continuously stirring. Sprinkle with turmeric, coriander and chili powder. Beat the yogurt and blend into a smooth mixture. Add yogurt and salt.
Mix gently, cover and cook for about 10 minutes on low heat.