@Yogeshwaran Thank you for reaching out to us, As I understand you want to configure banned password list within your on-premise AD environment.
Refer to this section - https://learn.microsoft.com/en-us/azure/active-directory/authentication/concept-password-ban-bad-on-premises#:~:text=or%20fail.-,How%20Azure%20AD%20Password%20Protection%20works,-The%20on%2Dpremises which explains how Azure AD password protection works, its a combination of Azure AD & on-premise AD.
Deployment strategy - https://learn.microsoft.com/en-us/azure/active-directory/authentication/howto-password-ban-bad-on-premises-deploy
Let me know if you have any further questions, feel free to post back.