The Kulu woman is pretty much the only major female character in this book, which makes us wonder why Kipling can't seem to imagine an adventure with women taking an active part in it. However Kim takes place when adventurous quests were mostly supposed to be for boys—the gender roles in this book are pretty consistent with the fact that it appears in 1901. (Side note: The Wizard of Oz was published in 1900… and is basically an adventure story about a girl realizing her power and potential… just sayin'.)
Anyway, so the Kulu woman is a tough, feisty lady who enjoys Kim's ridiculous flattery (even though she knows that he is teasing) and the lama's learned religious discussions (even though the two of them disagree on the value of charms to ward off sickness for her grandsons). She reappears several times as a reliable person to take care of the lama while Kim is at school or otherwise not available for questing.
We first meet this elderly woman from the region of Kulu (now spelled Kullu), which lies in the foothills of the Himalayas, while Kim and the lama are traveling south to Benares but before Kim finds his father's regiment.
The narrator explains that many wealthy Indians keep their wives and daughters hidden in public in order to protect their modesty. But for elderly women past childbearing age, they want a little excitement in their lives, and modesty no longer seems to be quite so much of an issue. (In fact, the novel puts this idea really cruelly: these women are "withered and undesirable" and so do not "object to unveiling" in public [4.38].) These women are much less careful about being seen as they travel around India, even though they may ride in curtained wagons to stay sheltered from the other people around them.
Kim spots just such a woman on the Grand Trunk Road, traveling with guards from her home town in Kulu and men hired by her son-in-law to escort her south for a visit. So once again, Kipling introduces all of these social and cultural details to give us the feeling that the Kulu woman is less of an individual and more of a type of person you might meet on the Grand Trunk Road.
There are two things we want to point out about the Kulu woman: first, she has this rare freedom to say what she wants whenever she wants to because she is elderly (and wealthy). As a specifically old woman, she does not need to obey the same social rules that keep other, younger, childbearing-aged Indian women hidden from strange men.
Kim can tell that the Kulu woman is not too hung up on proper behavior because he hears her through her curtain, giving an "increasing cackle of complaints, orders, and jests, and what to a European would have been bad language" (4.39). What makes her interesting both to Kim and to the reader is not only that she is much more frank and straightforward than a lot of the other characters (even the male ones) in the novel, but that she is also not European in her manners.
The novel is inviting us to laugh a little bit at this rough-spoken old lady, who doesn't obey the rules of politeness for either India or England. (Frankly, some of us want to grow into this style of lady, who is too darned old to care what people think of her—the Kulu woman is our new hero.)
The second thing we want to point out is that the Kulu woman is deeply single-minded. Like Kim with his Great Game and the lama with his River of the Arrow, the Kulu woman only wants to think about one thing: her grandsons. Whenever they meet, the Kulu woman, as a fellow Buddhist, pesters the lama endlessly for magic charms guaranteeing the health of her grandsons.
The lama resists and resists making these charms (since he doesn't really think that is a true expression of his philosophical Buddhist faith), but he eventually caves when Kim gets sick and the Kulu woman nurses him back to health at the end of the novel. The lama promises that he "who was Abbot of Suchzen will make as many [charms] as thou mayest desire" (15.47). Now that the lama has admitted that he thinks of Kim as a grandson, he gets where the Kulu woman is coming from in terms her obsessive worry about her grandsons' health.