He was later released on bail at the Mahabubabad town police station, an official said.
The MLA from Mahabubabad, B Shankar Naik, allegedly behaved in a rude manner with the collector at a public meeting organised during the programme to launch 'Harita Haaram' (a massive plantation drive) in that district yesterday.
The collector later complained to police.
Based on the complaint, the Mahabubabad town police last night registered a case against the MLA under IPC sections 353 (assault or criminal force to deter public servant from discharge of his duty), 354 (assault or criminal force to woman with intent to outrage her modesty) and 509 (word, gesture or act intended to insult the modesty of a woman). Mr Naik appeared before police this morning after he was summoned.
"After registration of the case, we called the MLA and he appeared before police. He was placed under arrest and granted bail on a personal bond, and he was subsequently released," a senior police official told PTI.
"The collector in her complaint stated that she felt hurt over the MLA's indecent behaviour after he allegedly touched her hand," he said.
"Further investigation is on...we are collecting CCTV footage and other clippings and will proceed accordingly," the official said.
A person convicted under IPC section 354 shall be punished with imprisonment of either description for a term which may extend to two years, or with fine, or with both.
Local TV channels aired a footage which purportedly showed the MLA allegedly touching the collector's arm.
The MLA denied any wrongdoing on his part and said he respected the collector and apologised to her.
Telangana Chief Minister K Chandrasekhar Rao had yesterday expressed anger over the behaviour of his party MLA at the official event.
The chief minister instructed the legislator to personally meet the collector and tender an unconditional apology to her.
Mr Rao warned the MLA that if he does not change his behaviour, he would be suspended from the party.
The CM also asked Deputy Chief Minister Kadiam Srihari and TRS MP Sitaram Naik "to speak to the collector and settle the matter on behalf of the government and the TRS," and said such incidents should not recur.