SECURITIES AND EXCHANGE COMMISSION

                                   FORM 20-F/A
                                 Amendment No. 1

                 ANNUAL REPORT PURSUANT TO SECTIONS 13 OR 15(D)
                     OF THE SECURITIES EXCHANGE ACT OF 1934

                   For the fiscal year ended December 31, 2005

                         Commission file number 2-41957

                         ISRAEL BANK OF AGRICULTURE LTD.
             (Exact name of registrant as specified in its charter)

                     83 Hashmonaim Street, Tel Aviv, Israel
                    (Address of principal executive offices)

           Securities registered pursuant to Section 12(b) of the Act:

                                      NONE

           Securities registered pursuant to Section 12(g) of the Act:

                                      NONE

        Securities for which there is a reporting obligation pursuant to
                           Section 15(d) of the Act:

7.5% Cumulative Redeemable Preference "C" shares linked to the U.S. Dollar.
Indicate the number of outstanding shares of each of the issuer's classes of
capital or common stock as of the close of the period covered by the annual
report.

<TABLE>
<S>                                                                       <C>
Ordinary shares of NIS 0.0001                                             135,050,000
    8% Cumulative and Participating Preference "A" Shares of NIS 0.001    195,768,412
    7.5% Cumulative Redeemable Preference "C" Shares of NIS 0.042
    linked to the U.S. Dollar                                                 250,000
</TABLE>

Indicate by check mark if the registrant is a well-known seasoned issuer, as
defined in Rule 405 of the Securities Act. Yes |_| No |X|

If this report is an annual or transition report, indicate by check mark if the
registrant is not required to file reports pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934. Yes |_| No |X|

Note - Checking the box above will not relieve any registrant required to file
reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
from their obligations under those Sections.

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.

   Yes |X|         No |_|

Indicate by check mark whether the registrant is a large accelerated filer, an
accelerated filer, or a non-accelerated filer. See definition of "accelerated
filer and large accelerated filer" in Rule 12b-2 of the Exchange Act. (Check
one):

   Large accelerated filer |_|  Accelerated filer |_|  Non-accelerated filer |X|

Indicate by check mark which financial statement item the Registrant has elected
to follow:

         Item 17 |X|         Item 18 |_|

<PAGE>

If this is an annual report, indicate by check mark whether the registrant is a
shell company (as defined in Rule 12b-2 of the Exchange Act). Yes |_| No |X|

                                EXPLANATORY NOTE

This Form 20-F/A is being filed to amend the Annual Report on Form 20-F for the
fiscal year ended December 31, 2005, filed by Israel Bank Of Agriculture Ltd.
(the "Registrant") on June 28, 2006, (the "Form 20-F"), as follows:

* To include a Report of Independent Auditors relating to the financial
statements of Palestine Agricultural Settlement Association Ltd, as of December
31, 2005, in this Form 20-F/A

Other than the above amendment, no changes were made to the financial statements
of the Registrant included in the Form 20-F, and the balance of Item 17 of the
Form 20-F is hereby incorporated by reference.

This Form 20-F/A consists of a cover page, this explanatory note, Item 17 (as
amended) of the Form 20-F, the Report of Independent Auditors described herein,
the signature page and the required certifications of the General Manager and
the Chief Financial Officer of the Registrant.

Other than as stated above, this Form 20-F/A does not, amend, update or restate
the information in the Form 20-F or reflect any events that have occurred after
the Form 20-F was filed.

PART III

ITEM 17. FINANCIAL STATEMENTS

         The Report of Independent Auditors which relates to the financial
         statements of Palestine Agricultural Settlement Association Ltd. as of
         December 31, 2005 follows the signature page of this Form 20-F/A.

         SIGNATURES

      The registrant hereby certifies that it meets all of the requirements for
filing Form 20-F/A and that it has duly caused and authorized the undersigned to
sign this amendment to the Annual Report on its behalf.

Dated: August 21, 2006                Israel Bank of Agriculture Ltd.


                                        By:    /s/ Lea Patalovsky
                                               ---------------------------------
                                        Name:  Lea Patalovsky
                                        Title: General Manager

<PAGE>

                    [LETTERHEAD OF FIBICH, ASHKENAZI & CO.]

                    Auditor's Report to the Shareholders of
               Palestine Agricultural Settlement Association Ltd.

We have  audited  the  accompanying  Balance  Sheets of  Palestine  Agricultural
Settlement  Association Ltd ("the company") as at December 31, 2005 and 2004 and
the related statements of operations,  changes in shareholders'  equity and cash
flows for the years ended December 31, 2005 and 2004. These financial statements
are the  responsibility of the Company's  management.  Our  responsibility is to
express an opinion on these financial statements based on our audit.

We  conducted  our  audits  in  accordance  with  generally   accepted  auditing
standards,  including those prescribed under the Auditors' Regulation (Auditor's
Mode of Performance  1973). Those standards require that we plan and perform the
audit to obtain reasonable  assurance about whether the financial statements are
free of material  misstatement.  An audit includes  examining,  on a test basis,
evidence supporting the amounts and disclosures in the financial statements.  An
audit also includes  assessing the accounting  principles  used and  significant
estimates  made by  management,  as well as  evaluating  the  overall  financial
statement  presentation.  We believe that our audits provide a reasonable  basis
for our opinion.

In our opinion,  the above mentioned  statements present fairly, in all material
respects, the financial position of the company as at December 31, 2005 and 2004
and the  results of its  operations,  changes in  shareholders'  equity and cash
flows for the two years ended on these dates.

As explained in Note 2, the financial statements for dates and reporting periods
subsequent to December 31, 2003 are stated in reported amounts, in accordance
with the accounting standards of the Israel Accounting Standards Board.

The financial statements for dates and reporting periods that ended up to the
aforementioned date, except for the related statements of operations - Note
2.b.4, are stated in values that were adjusted to that date according to the
changes in the general purchasing power of the Israeli currency, in accordance
with opinions of the Institute of Certified Public Accountants in Israel.

Without restricting our statement of opinion, we refer to the contents of note 1
- general.


                                                     /s/ Shlomo Ashkenazi
                                                         Fibich, Ashkenazi & Co.
                                             Certified Public Accountants (Isr.)

6.7.2006

<PAGE>

EXHIBITS

12.1  Certification  of the  General  Manager  pursuant  to Section  302, of the
      Sarbanes - Oxley Act of 2002.

12.2  Certification  of the Chief Financial  Officer pursuant to Section 302, of
      the Sarbanes - Oxley Act of 2002.

13.1  Certification  of the  General  Manager  and the Chief  Financial  Officer
      pursuant to 18 U.S.C Section  1350, as adopted  pursuant to Section 906 to
      the Sarbanes - Oxley Act of 2002.