Real has no intention to allow the midfielder to leave the club this summer and have the intention to reject any offer that comes in for the Croatian.
The report claims that a deal has been agreed with the player training away from the first-team squad as he pushes for a move.
Real Madrid manager Julen Lopetegui has attempted to end speculation linking Luka Modric with a move to Inter, insisting the Blancos will welcome him back with open arms.
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With many possible destinations mooted for the Croatian to move to, including links with Manchester United, but its Chelsea who have taken the march to bring him on loan.
The Croatia worldwide has been linked with a move to Serie A giants Inter Milan.
New Chelsea boss Maurizio Sarri has already splashed out on Jorginho but he admitted last week he wanted another midfielder to compliment the Italian worldwide and N'Golo Kante in the middle of the park. Kovacic's main problem at Madrid had been the lack of regular game time. Kovacic is still 24 years old and seems destined to be a starter for Real Madrid once Luka Modric leaves or enters his decline.
'He'll be happy to play football, like he already was, at Real Madrid.