Described is a mechanism for dynamically allocating receive buffers on a server to a plurality of clients in a network environment. The server maintains a list of the number of transaction credits in use by each client, the number of transaction credits allocated to each client, and the number of pending transaction requests that are not being handled due to a limitation on the number of allocated transaction credits. The transaction credits correspond to the receive buffers. In a resource constrained situation, the server computes an equitable distribution of the available credits and reallocates the available credits based on that equitable distribution.