The action comes apparently as the Bihar-based party is keen to give an impression that it will "have no business" with BJP.
"Madhya Pradesh state unit of RJD headed by Sanjay Silwat is dissolved with immediate effect. We have come to know that he was trying to tie up with BJP and merge the RJD unit in the state's ruling party.
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Silwat and all the office bearers, roughly over 24, as such stand suspended from RJD, sources in the party said.
Bhandari said his party was against BJP mainly on the issue of communalism and had been fighting it tooth and nail, as it believes in secular politics and hence such "anti-party activities" cannot be tolerated.
The RJD leader said a new state unit in Madhya Pradesh will be constituted soon after consultation with the party chief.
Prasad was yesterday taken to jail after being convicted by a special CBI court in the fodder scam case in Ranchi.
RJD's rival in Bihar, JD(U), had been alleging a "nexus" between BJP and RJD for some time after Nitish Kumar's party walked out of NDA, breaking its 17-year alliance with BJP in June this year.
RJD has been, however, vehemently denying the contention.
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