In a pan, heat oil on low heat. Add peanuts to the pan and roast them for few minutes.
1 tbsp oil, 1 tbsp peanuts
Next, add dry red chilies and chopped onions. Saute for 2 minutes and cook till the raw smell of onions disappears.
3-4 nos dry red chillies, 1 no medium onion
Transfer the cooled down roasted mixture to a grinding jar. Add grated coconut, tamarind, and salt.
1/2 cup coconut, shredded, 1 no small piece of tamarind, salt
Blend the ingredients into a coarse or smooth paste, depending on your preference. Add a little water if needed to achieve the desired consistency.
water
Heat oil in a small pan for tempering. Add mustard seeds, urad dal, cumin seeds, and curry leaves. Allow them to splutter and turn golden brown.
1 tbsp oil, 1/8 tsp mustard seeds, 1/8 tsp cumin seeds, 7-8 nos curry leaves
Pour the tempering over the peanut-coconut mixture and mix well.
Taste and adjust salt or spice levels if necessary.
Your peanut chutney is ready to be served!