If I understand correctly: You have a new schema where you defined new groups, but those groups are not set yet. And you are loading the new schema with an older CDB which will trigger the DB upgrade process.
Can you send a show configuration output for nacm and aaa nodes?
I am suspecting you have some rules that prevent users from changing their own passwords.
Thanks for the response nabil yes. I tried resolving by forcing loading the aaa init file after phase 2. I am booting with a backed up cdb file. Why the aaa init file not automatically picked up ?. I have given the cdb path as well in config.