Asus seems to have acknowledged the issue and made a FOTA update available.
Today i got an update with version 131 and it resolved the issue.
Following are the details of the update-
After i updated to this firmware and rebooted the DRM info still showed security level as L3 but after rebooting again after 10 minutes the DRM Info showed security level as L1.
Following is the screenshot of DRM Info-
So just wait for the update and reboot again after some time if the DRM security level is not updated immediately.