Resolution:
Siebel does not support the connect string, user name and password encryption. Hence, it is not possible to have the password encrypted while sent over the wire to establish connection from the ADSBL.

Whenever a password is given at the adapter end, it is stored as encrypted value in the local file system. Adapter reads it as an encrypted value and later while establishing the connection decrypts it as a plain text since the Siebel application (JDB jars) is not aware of encryption code.

Note: The username, password, and connecting string is not encrypted over the wire while establishing the connection but the communication, once the connection is established, can be encrypted depending on the settings in the connect string.