Mahathir added that Modi, whom he met in Russia during an economic forum earlier this month, made no extradition request for Naik despite an official notice from New Delhi, reports Malay Mail.
"Not many countries want him. I met with Modi. He didn't ask me for this man," Mahathir told the Kuala Lumpur-based BFM Malaysia radio station on Tuesday morning.
He said that the city of Putrajaya is still looking for a place to send the 53-year-old Naik.
Mahathir also reaffirmed that Naik will no longer be allowed to publicly speak in Malaysia following his racially divisive remarks which include saying that the Chinese should be sent back to China.
"Well, he's not a national of this country. He has been given, I think by the previous government, permanent residence status. A permanent resident isn't supposed to make any comments on this country's systems and politics. He has breached that. He is now not allowed to speak.
"We are trying to find some place he can go to but at the moment, no one wants to accept him," the Prime Minister added.
Naik is wanted in India for serious charges related to terrorism after his name cropped in connection with a ghastly terror attack at Holey Artisan Bakery in Dhaka in July 2016.
The Mumbai-born founder of the controversial 'Peace TV' has been living in Malaysia since 2017 after fleeing from India.
Last month, Naik was banned from delivering public talks in every state in Malaysia by the police in the interest of national security.
On August 3, he said that Hindus in Malaysia get "100 times more rights" than the Muslim minority gets in India, and yet they support the "Prime Minister of India and not the Prime Minister of Malaysia".
( With inputs from IANS )