The German club has been seriously considering another loan move although the Blues are keen for him to remain in England to complete his recovery.
Baba Rahman will stay at Chelsea to complete his recovery from an anterior cruciate ligament injury, despite prolonged interest from Schalke to bring him back to the Bundesliga, Goal understands.
The decision on the 23-year-old was made amicably as the Blues would prefer him to continue his recovery in their world-class Cobham Training Centre, while Schalke is not keen on rushing their former player back into the first-team action.
Chelsea have been trying to sign wing-backs all summer but they failed in attempts to convince Juventus's Alex Sandro to make the move to Stamford Bridge, while Manchester City is understood to have outbid Conte's side for Danilo.
Rahman has made 23 appearances for Chelsea since signing from Augsburg for £21 million in 2015.
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