System and method for facilitating fine-grain flow control in a network interface controller (NIC)

A network interface controller (NIC) capable of facilitating fine-grain flow control (FGFC) is provided. The NIC can be equipped with a network interface, an FGFC logic block, and a traffic management logic block. During operation, the network interface can determine that a control frame from a switch is associated with FGFC. The network interface can then identify a data flow indicated in the control frame for applying the FGFC. The FGFC logic block can insert information from the control frame into an entry of a data structure stored in the NIC. The traffic management logic block can identify the entry in the data structure based on one or more fields of a packet belonging to the flow. Subsequently, the traffic management logic block can determine whether the packet is allowed to be forwarded based on the information in the entry.