The alias name of this db not found in database directory

I am new to Toad for db2. Through DB2 CMD in Toad I setup a connection to desired database INSTPRZ
C:>DB2 CONNECT TO INSTPRZ USER db2inst1
Enter current password for db2inst1:

Database Connection Information

Database server = DB2/LINUXX8664 11.5.6.0
SQL authorization ID = DB2INST1
Local database alias = INSTPRZ

I tried to connect through Toad to INSTPRZ so I choose Create New Connection, and in Database Alias box i choose INSTPRZ. Connection information looks good. In NAME field is entered INSTPRZ().
Trying to connect lead to
The alias name of this database was not found in database directory error

TIA, Zvonimir