The Stamford Bridge side last month tabled a bid of £22 million for the Croatian playmaker, and the Tottenham Hotspur manager believes the 25-year-old's value is far greater.
Modric was voted Tottenham's player of the season last term, and has become one of the White Hart Lane side's key assets since arriving from Dinamo Zagreb in the summer of 2008, impressing both domestically and in last season's Champions League.
"I was surprised by the figure, it's a farcical bid," Redknapp told Sky Sports. "If they're going to make an offer, make an offer, but £22 million for Luka Modric is ridiculous.
"We wouldn't put a valuation on him. He's such a fantastic player, we don't want to sell him.
"He's up there with the very, very best players in the Premier League and I think he can play in any team in the world, he's that good."
Modric has also been linked with a move to Premier League champions Manchester United, but Redknapp has insisted the club don't want to sell their star man, even if they can't offer the player Champions League football or the same financial package as some of their Premier League rivals.
"That is the problem, it's not only Chelsea who would want him, two or three other clubs would be bidding if we made him available.
"But we don't want to lose him. We need to keep our best players, we need to improve our squad, not decimate it by selling our best players.
"There's no reason we can't show the ambition ourselves. I'm not saying we can pay the wages of Manchester City or Chelsea, but we've got a great group of players and if we can add a few more anything could happen."
It is reported that Modric will meet with Spurs chairman Daniel Levy on Tuesday in order to seek a resolution before the Croatian returns to pre-season training.
