Heat oil over medium-high heat in large non-stick skillet. Saute onions for 2 minutes, then add bell peppers, garlic and ginger and saute for 2 minutes more.
Add curry paste and peanut butter and saute for 1 minute. Add 1 ½ cans of coconut milk. Whisk cornstarch into remaining 1/2 can coconut milk then add to the pan. Stir well.
Add chicken, stirring to coat. Simmer for 10-15 minutes or just until chicken is no longer pink and sauce begins to thicken.
Stir in sugar, fish sauce, lime juice, and basil. Simmer for 5 minutes. Season with salt and pepper, to taste.
Serve over hot cooked rice.