MUMBAI (Reuters) - India's Axis Asset Management said on Friday it has suspended two mutual fund managers as part of an investigation into potential irregularities.

Axis did not elaborate on the irregularities, but said it had initiated the investigation in February and had appointed external advisers to assist.

"We take compliance with applicable legal/regulatory requirements seriously, and have zero tolerance towards any instance of non-compliance," the statement stated.

Markets regulator, the Securities and Exchange Board of India (SEBI), was examining whether fund managers at Axis had engaged in "front-running", an illegal practice of trading in a security with insider knowledge of an upcoming transaction that could affect its price, local media reported.

SEBI did not immediately respond to a request for comment.

Axis Asset Management is 75% owned by Axis Bank, India's third largest private lender, while the rest is held by British asset manager Schroders Plc.

Axis mutual fund, which has over $32 billion in assets under management and more than 9.8 million active investor accounts, offers 56 schemes, including equity, debt and hybrid funds.

(Reporting by Abhirup Roy;Editing by Elaine Hardcastle)