Exchange subfolders not syncing with Mail app after macOS BigSur upgrade.

In Mail (v 14.0) app after update to macOS Big Sur (v 11.1), Exchange (Office365) subfolders are not syncing, while OutLook is working fine on the same machine. Inbox and Trash folders are syncing but not the remaining ones. I have deleted and added the exchange account multiple times. Also, iCloud mail folders have stopped syncing - especially the ones that are newly created - they show up in Mail app but not in the web interface or Outlook. Any ideas, what is going on? I see others having similar issues too.

Thanks.