OAuth2 not working with any APIs

I have Add an OAuth2 Application in my nextcloud.

Now I am able to successfully generate an access token and refresh token using postman. But the access_token generated cannot be used to authenticate any of the nextcloud api. I have tried with user Provisioning API but it is giving 401 error. Access_token is generated with admin credentials for testing.

Does it work using Basic Auth?

That’s the only approach documented for the Provisioning API.

https://docs.nextcloud.com/server/latest/admin_manual/configuration_user/user_provisioning_api.html

(P.S. This is not my wheelhouse, but just something to at least confirm works first).

Yes, It is working with Basic Auth.

Where & how can I use AUTH2 for authentication.

Try using Bearer instead of Basic in your Authorization header. I’d only expect to see Basic for base64 encoded (but not encrypted) credentials.