The most common cause for this problem is incorrect permission on /etc/ssh/sshd_config.
The default permission on /etc/ssh/sshd_config is 644 and owned by root system.
Check the permission on the sshd_config file.
# ls -l /etc/ssh/sshd_config
Change the permission on the sshd_config file to 644 if it is something other than 644. (rw-r–r–)
# chmod 644 /etc/ssh/sshd_config
Test by attempting another sftp request.