Combine all ingredients from yogurt to salt in a blender till it becomes smooth. There should be no bites of shallots or chilli.
In a small saucepan, heat oil. Splutter mustard and cumin seeds.
Add the dried chillies and curry leaves and saute for a few seconds.
Minimize the flame to the lowest and slowly pour the yogurt mixture. Keep on simmer for 3-5 minutes - do not boil. Boiling will cause breakage of the yogurt.
Switch off and serve with rice!